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Worldwide personal tax guide

Income tax, social security and immigration


Worldwide personal tax guide Income tax, social security and immigration 2013–2014


The Worldwide personal tax guide is part of a suite of premier tax guides published each year by EY, all available online along with Global Tax Alerts and other valuable publications on and in our EY Global Tax Guides app.

The companion guides are the Worldwide corporate tax guide, the Worldwide VAT, GST and sales tax guide, the Transfer pricing global reference guide and the International estate and inheri- tance tax guide. Each represents thousands of hours of tax research, and within the limits of annual publications, they are the most reliably comprehensive tax guides available.

Governments worldwide have greatly accelerated the pace of their tax legislation, increasing the risk that taxpayers will be caught unprepared in some countries. A current guide like this one is all the more valuable in such a shifting tax landscape.

The content of the Worldwide personal tax guide is straightfor- ward. Chapter by chapter, from Afghanistan to Zimbabwe, we summarize personal tax systems and immigration rules in more than 150 jurisdictions. The content is current as of 1 May 2013, with exceptions noted.

Each chapter begins with EY’s in-country executive and immi- gration contact information, and some jurisdictions add contacts from our International High Net Worth Group. Then we lay out the essential facts about the jurisdiction’s personal taxes. We start with the personal income tax, explaining who is liable for tax and, at some length, what types of income are considered taxable and which rates, deductions and credits apply. A section on other taxes varies by jurisdiction but often includes estate, inheritance, gift and real estate taxes. A social security section covers pay- ments for publicly provided health, pensions and other social benefits, followed by sections on tax filing and payment proce- dures as well as double tax relief and tax treaties. The immigra- tion sections provide information on temporary visas, work visas and permits, residence visas and permits, and family and per- sonal considerations.

At the back of the book, you will find a list of the names and symbols for all national currencies and a list of contacts for emerging markets.

Please contact us if you need more copies of the book, and keep up with the latest updates at and find out more about the app at


September 2013

Although this publication is intended to be comprehensive, it should not be regarded as offering advice or a complete explana- tion of the tax and other matters referred to and is subject to changes in the law and other applicable rules. Also, this publication does not provide guidance on the application of the information contained in practice. Local publications that are more detailed are frequently available, and readers are advised to consult their local EY professionals for further information.

About EY’s Tax Services

Your business will only succeed if you build it on strong founda- tions and grow it in a sustainable way. At EY, we believe that managing your tax obligations responsibly and proactively can make a critical difference. So our 32,000 talented tax profession- als in more than 140 countries give you technical knowledge, business experience, consistency and an unwavering commit- ment to quality service — wherever you are and whatever tax services you need.

About EY’s Human Capital Services

In today’s increasingly regulated, highly competitive global busi- ness environment, an organization’s people are essential to sus- tain success. EY’s Human Capital Services’ holistic approach, across a broad continuum of services, and our responsive, high- performing teams provide the interconnected competencies and insight required to address broad business issues and minimize risk. Through our unmatched global footprint with more than 7,000 HC professionals in over 140 countries, we advise many of the world’s largest employers — as well as those just venturing abroad for the first time.

EY’s Human Capital Services helps our clients manage the com- plex challenges of deploying a globally mobile workforce. We can assist with the design and implementation of total reward strategies to engage people and drive the organization’s business strategy. Our exceptional client service helps manage HR com- pliance and risk. We also provide HR and payroll transformation, as well as technology advisory services and project management. We work with our clients to attract, train and motivate the people necessary to achieve their organizational goals. By helping to integrate the people agenda into their business strategy, we help our clients improve their business in the evolving global econo- my and realize sustainable economic growth.

© 2013 EYGM Limited. All Rights Reserved.


EY Global Tax contacts Afghanistan Albania Algeria Angola Anguilla (Emerging markets chapter) Antigua and Barbuda (Emerging markets chapter) Argentina Armenia Aruba Australia Austria (European Union member state) Azerbaijan Bahamas Bahrain Bangladesh (Emerging markets chapter) Barbados Belarus Belgium (European Union member state) Bermuda Bolivia Bonaire, Sint Eustatius and Saba (BES-Islands) Bosnia-Herzegovina (Emerging markets chapter) Botswana Brazil British Virgin Islands Brunei Darussalam Bulgaria (European Union member state) Burkina Faso (Emerging markets chapter) Cambodia Cameroon Canada Cayman Islands Chad Chile China







































Congo, Democratic Republic of



Republic of


Costa Rica


Côte d’Ivoire


Croatia (European Union member state as of 1 July 2013)




Cyprus (European Union member state)


Czech Republic (European Union member state)


Denmark (European Union member state)


Dominica (Emerging markets chapter)


Dominican Republic






El Salvador


Equatorial Guinea


Estonia (European Union member state)




Faroe Islands (Emerging markets chapter)




Finland (European Union member state)


France (European Union member state)






Germany (European Union member state)




Gibraltar (Emerging markets chapter)


Greece (European Union member state)


Greenland (Emerging markets chapter)


Grenada (Emerging markets chapter)






Guernsey, Channel Islands




Guyana (Emerging markets chapter)




Hong Kong Special Administrative Region (SAR) of China


Hungary (European Union member state)










Ireland, Republic of (European Union member state)


Isle of Man




Italy (European Union member state)






Jersey, Channel Islands








Korea (South)






Kyrgyzstan (Emerging markets chapter)




Latvia (European Union member state)






Liberia (Emerging markets chapter)






Lithuania (European Union member state)


Luxembourg (European Union member state)


Macau Special Administrative Region (SAR) of China


Macedonia, Former Yugoslav Republic of










Mali (Emerging markets chapter)


Malta (European Union member state)


Marshall Islands (Emerging markets chapter)








Micronesia (Emerging markets chapter)




Monaco (Emerging markets chapter)


Mongolia (Emerging markets chapter)


Montenegro, Republic of


Montserrat (Emerging markets chapter)










Netherlands (European Union member state)


New Zealand




Niger (Emerging markets chapter)




Northern Mariana Islands, Commonwealth of the








Palau (Emerging markets chapter)


Palestinian Authority




Papua New Guinea








Poland (European Union member state)


Portugal (European Union member state)


Puerto Rico




Romania (European Union member state)


Russian Federation




St. Kitts and Nevis (Emerging markets chapter)


St. Lucia


St. Vincent and the Grenadines (Emerging markets chapter)










Sint Maarten


Slovak Republic (European Union member state)


Slovenia (European Union member state)


South Africa


South Sudan (Emerging markets chapter)


Spain (European Union member state)


Sri Lanka






Sweden (European Union member state)






Tajikistan (Emerging markets chapter)






Timor-Leste (Emerging markets chapter)


Trinidad and Tobago






Turkmenistan (Emerging markets chapter)






United Arab Emirates


United Kingdom (European Union member state)


United States


U.S. Virgin Islands










Yemen (Emerging markets chapter)






Contacts for emerging markets


Foreign currencies



EY Global Tax contacts



Ernst & Young Global Becket House 1 Lambeth Palace Road London SE1 7EU England

+44 (20) 7980-0000 Fax: +44 (20) 7980-0275 (Tax)

EY Global Tax

David Holtze,

Global Vice Chairman – Tax

Srinivasa Rao,

Global Deputy Vice Chair – Tax

Area Tax Leaders


Kate J. Barton


James D. Hunter

+44 (20) 7980-0019 Mobile: +44 7825-938-783 Fax: +44 (20) 7980-0275 Email:

+44 (20) 7980-0936 Mobile: +44 7825-341-657 Fax: +44 (20) 7980-0275 Email:

New York: +1 (212) 773-8762 Boston: +1 (617) 585-6820 Mobile: +1 (617) 230-1500 Efax: +1 (866) 854-9928 Email:

+852 2849-9338 Mobile: +852 6119-3360 Fax: +852 2157-6581 Email:

Europe, Middle East, India and Africa

Stephan Kuhn


Kenji Amino

+41 (58) 286-44-26 Mobile: +41 (58) 289-44-26 Fax: +41 (58) 286-30-04 Email:

+81 (3) 3506-2164 Mobile: +81 (80) 1394-9144 Fax: +81 (3) 3506-2412 Email:

Global Tax Functional Leaders

Paul Antrobus,

Global Tax – Talent Leader

Mike Brorman,

Global Tax – Business Development Leader

+420 225-335-811 Mobile: +420 731-627-015 Fax: +420 225-335-222 Email:

+44 (20) 7951-2700 Mobile: +44 7748-920-092 Fax: +44 (20) 7980-0275 Email:



Jim Miller,

+44 (20) 7980-0102

+1 (312) 879-3683

Global Tax – Chief Financial Officer

Mobile: +44 7768-818-456 Fax: +44 (20) 7980-0275

Meg Salzetta,


Global Tax – Communications and Marketing Leader

Mobile: +1 (773) 817-9012 Efax: +1 (866) 288-3221 Email:

Michael Wachtel,

Global Tax – Quality Leader

+61 (3) 8650-7619 Mobile: +61 408-994-646 Fax: +61 (3) 8650-7777 Email:

Global Tax Subservice Lines Leaders

Business Tax Services

David H. Helmer,

+44 (20) 7980-0373 Mobile: +44 7768-470-754 Fax: +44 (20) 7980-0275 Email:

Global Director

Global Compliance & Reporting

Aidan O’Carroll,

Global Director

Human Capital

Dina A. Pyron,

Global Director

+44 (20) 7980-0789 Mobile: +44 7768-911-551 Fax: +44 (20) 7980-0275 Email: aidan.o’

+44 (20) 7980-0679 Mobile: +44 7876-877-200 Fax: +44 (20) 7951-1345 Email:

Indirect Tax

Philip Robinson,

Global Director

Mobile: +41 (58) 289-31-97 Email:

International Tax Services

Alex Postma,

Global Director

Transaction Tax

+44 (20) 7980-0286 Mobile: +44 7827-842-941 Fax: +44 (20) 7980-0275 Email:

David Sreter,

Global Director

Senior Tax Partner

James J. Tobin

+1 (212) 773-5848 Mobile: +1 (917) 363-0032 Fax: +1 (212) 773-6350 Email:

+1 (212) 773-5848 Mobile: +1 (917) 363-0032 Fax: +1 (212) 773-6350 Email:
+1 (212) 773-5848 Mobile: +1 (917) 363-0032 Fax: +1 (212) 773-6350 Email:

+1 (212) 773-6400 Mobile: +1 (917) 365-9466 Fax: +1 (866) 862-1314 Email:

Editor – Worldwide Personal Tax Guide

Ronald Anes

+1 (732) 516-4551 Efax: +1 (866) 863-4590 Email:




GMT +4½

Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants House 10-11 Street 2, Shirpoor Road Kabul Afghanistan

Executive and immigration contacts

Nasim Hyder

(resident in Karachi, Pakistan)

Salman Haq

(resident in Karachi, Pakistan)

Basheer Juma

+92 (21) 3565-0007-11 Fax: +92 (21) 568-1965 Email: +92 (21) 3565-0007 Email: +93 (75) 205-5025 Email:

A. Income tax

Who is liable. Taxation in Afghanistan is based on an individual’s residential status for tax purposes. In general, tax residents of Afghanistan are taxed on their worldwide income, while nonresi- dents are taxed on their Afghan-source income only. However, a nonresident person may be exempt from income tax in Afghanistan if the person is from a foreign country that grants a similar exemption to Afghan residents based in that country.

An individual is considered to be a tax resident of Afghanistan if any of the following three conditions are met:

• The person has his or her principal home in Afghanistan at any time during the tax year.

• The person is present in Afghanistan for a period aggregating 183 days in a tax year (21 December to 20 December).

• The person is an employee or official of the government of Afghanistan and has been assigned to perform services abroad at any time during the tax year.

Income subject to tax

Employment income. Income from salary is Afghan-source income if it is attributable to employment exercised in Afghanistan. No exceptions exist. As a result, all cash and noncash benefits received with respect to employment in Afghanistan may be con- sidered taxable.

Business income. All residents and nonresidents who are engaged in economic, service or business activities are taxed on their busi- ness income.

Natural persons who engage in business activities and meet both of the following conditions are subject to fixed tax:

• Their income is neither exempt nor subject to withholding tax.

• Their total gross income is less than AFN 3 million for the tax year.


Natural persons who have total income of less than AFN 60,000 from all sources, including business activities, are exempt from fixed tax.

The following are the rates of the fixed tax.

Gross income



Not exceeding


Annual amount of tax






AFN 2,000



(paid in equal quarterly installments) AFN 8,000



(paid in equal quarterly installments) 3% of gross income, or income tax and business receipt tax (BRT; see below)

A person who is required to pay 3% tax on gross income received

may elect to pay BRT (see Section B) and annual income tax under the normal tax regime. The election to pay income tax and BRT is irrevocable for a period of three years.

All natural persons who meet the conditions described above are required to file an income tax return.

Investment income. In general, dividend, interest and royalty in- come derived by nonresident natural persons is subject to a final tax of 20%, which is withheld at source. For resident individuals, this tax is treated as advance tax that may be credited against the eventual tax liability of the taxpayer.

Any gain derived from the sale, exchange, or transfer of assets is treated as taxable income.

Entertainment income. Income derived from entertainment exhi- bitions such as movies, radio or television, music, sport competi- tions and other similar activities, is subject to a 10% fixed tax.

Rental income. Income derived from the renting or leasing of tangible property owned by natural persons is subject to income tax that is withheld at source. The tax withheld is treated as ad- vance tax, which may be credited against the taxpayer’s final tax liability calculated using the normal income tax rates (see Rates).

Payments of rent by natural persons with respect to immovable property used for commercial, industrial and other economic purposes are subject to withholding tax at a rate of 10% or 15%, depending on the amount of the monthly rent.

Other income. Income from prizes, rewards, lotteries, gratuities, bonuses and service charges is subject to a final withholding tax

at a rate of 20%.

Exempt income. The following types of income are not subject to tax in Afghanistan:

• Grants, gifts and awards of the state, foreign governments, in- ternational organizations or nonprofit organizations, for contri- bution to science, art, literature, social progress or international understanding



• Scholarships, fellowships, and other grants for professional and technical training

• Health, accident, and unemployment insurance benefits and life insurance paid on death

• Compensation or damages for personal injuries or sickness or restitution of reputation

• Proceeds of borrowing and proceeds from stocks and bonds issued by companies

• Acquisition of assets in connection with mergers of domestic corporations and other legal persons

• Acquisition of movable or immovable property through expro- priation of property of debtors

• Payments on principal received from debtors

• Interest on bonds issued by the state or municipalities

• Income representing self-consumption of food, fuel or other goods by the producer or by members of their household

• Pensions of government employees

• Any other receipts according to the provisions of the law

Taxation of employer-provided stock options. Employer-provided

stock options are taxed at the time the options are exercised. The taxable amount is the difference between the market value of the shares on the date of issuance and the amount paid by the employee.

Capital gains and losses. Gains derived from the sale of capital assets used in business, including depreciable assets, shares of stock, trades or businesses, are taxed at the normal individual tax rates provided in Rates. However, capital gains derived from the sale, exchange or transfer of such assets held for more than 18 months are subject to tax at special rates. The special rate is calculated based on the average tax rate derived from distributing the gain equally over the holding period with 2% being the lowest rate.

If a natural person transfers an immovable or movable personal asset, the price received or receivable from such transfer is sub- ject to a 1% tax at the time of transfer of ownership of the prop- erty. This fixed tax is imposed instead of income tax. This mea- sure does not apply to capital gains derived from the sale or transfer of movable or immovable property acquired by inheri- tance. Such capital gains are not subject to tax.

Capital losses may offset capital gains only.

Partnerships. General and special partnerships are treated as flow-through entities with partners being taxed on their share of profits at the applicable individual tax rates. However, limited liability companies are taxed as corporations, and their distribu- tions are treated as dividends for tax purposes.


Deductible expenses. Expenses of production, collection and preservation of income are allowed as deductions from business

income if these expenses have been incurred during the tax year or one of the preceding three years. The following is a list of deductible expenses:

• Rent paid on leased property used for the purposes of the business


• Noncash benefits provided to employees if the providing of the benefits is directly related to the employer’s business

• Losses of property used for the production, collection, or pres- ervation of income, resulting from fires, earthquakes, casualties or any disasters to the extent that such losses are not reimbursed by insurance

• Premiums paid for insurance of property

Nondeductible expenses. The following personal expenses are not deductible:

• Costs and expenses incurred in providing benefits for owners, officers and management that are not necessary for the conduct of business

• Payments made to persons for their own benefit or enjoyment or their family’s benefit and enjoyment

• Costs of maintenance, repair, construction, improvement, fur- nishing, and other expenses with respect to the taxpayer’s fam- ily house or residence or any property devoted to the taxpayer’s own personal or family use

• Interest on personal loans

• Costs of commuting to and from work and cost of travel for personal purposes

• Cost of life, accident, health, and liability insurance for the protection of the taxpayer and his or her family

• Cost of any type of insurance for the protection of property used for personal purposes

Rates. The following tax rates apply to income derived by indi- viduals.

Taxable income

Tax on lower

Rate of


Not exceeding






















Withholding tax. All natural persons who employ two or more employees are required to withhold taxes from salaries and wages paid.

The tax withheld must be deposited together with the Report of Tax Withholding and Bank Deposit Form for Employers into an account determined by the Ministry of Finance (MoF) no later than 10 days after the end of the month in which the amounts are withheld.

For information regarding other withholding, see Income subject to tax.

Relief for losses. Business losses of approved and registered enter- prises are entitled to carry forward the net operating loss to offset profits of subsequent years until the losses are fully offset.

Credits. Foreign tax credits are generally available if foreign tax is paid on foreign-source income.

If a resident person derives income from more than one foreign country, he or she may claim a foreign tax credit against the tax on his or her foreign-source income from each country. The foreign



tax credit for each country is proportionate to the foreign-source income derived from that country as compared to worldwide income. A foreign tax credit is available in full.

B. Business receipt tax

Natural persons who have business income of AFN 3 million or more per year are subject to a 2% business receipt tax (BRT). BRT is imposed on the total income (gross receipts) received before any deductions. The following exceptions apply:

• Hotels, guest houses and restaurants that have total income of more than AFN 3 million per year are subject to BRT at a rate of 5%.

• All clubs and halls are subject to BRT at a rate of 5%.

• Telecommunication, airline services, hotels and restaurants pro- viding premium services are subject to BRT at a rate of 10%.

BRT paid is deductible in calculating taxable income.

C. Tax filing and payment procedures

Tax Identification Number. All natural persons who are liable to pay tax or custom duties must have a Tax Identification Number (TIN).

A TIN can be obtained by requesting an application form from the MoF or a mustofiat office that has a TIN office located on the premises.

Income tax returns. The tax year in Afghanistan for all natural persons is from 21 December to 20 December.

All natural persons who are subject to income tax must file a detailed tax return and balance sheet and submit it to the relevant tax office by the end of the third month of the following year (that is by 21 June of the following tax year).

Taxpayers who are subject to income tax, but are exempt from tax under an international agreement or treaty, must file an income tax return reflecting the effect of the exemption. The relevant agreement or portion of the treaty must be attached to the tax return together with an explanation as to why the agreement or treaty applies.

All residents and nonresidents who intend to leave the country, and who will be out of the country when their tax return is due must prepare and file their tax return two weeks before departing the country.

Tax payments. Taxpayers who are subject to fixed tax are re- quired to pay their tax quarterly by the 15th day of the month following the end of each quarter.

The income tax (or any tax instead of income tax) on shows, exhibitions, theaters, cinemas, concerts and sports must be paid by the 15th day of the following month. If the shows are not continuous, income tax must be paid after the end of each show.

Any income tax payable must be paid when the return is filed.

Business license. All nonresidents planning to conduct business activities in Afghanistan must obtain a business license from the Afghanistan Investment Support Agency (AISA).


The license needs to be renewed every year. The license may be renewed on the filing of the annual return and obtaining a clear- ance certificate. The applicant or an authorized representative must be personally present at the office of AISA to complete the license registration process.

D. Bilateral agreements

A bilateral agreement between Afghanistan and the United States

exists in the form of Diplomatic Notes exchanged between the countries. Under the Diplomatic Notes, tax exemption is provid- ed to the U.S. government and its military, contractors and per- sonnel engaged in activities with respect to the cooperative efforts in response to terrorism, humanitarian and civic assis- tance, military training and exercises, and other activities that the U.S. government and its military may undertake in Afghanistan.

Military and technical agreements have also been entered into with International Security Assistance Forces (ISAF), which allow similar exemptions.

Exemptions available under these agreements are subject to pri- vate rulings obtained from the MoF. In addition, the agreements generally do not provide exemptions from the obligation to with- hold tax from all payments to employees, vendors, suppliers, service providers, lessors of premises and other persons, as re- quired under the local tax laws.

E. Visas

To promote domestic and foreign investment, the Afghan govern- ment has begun implementing a policy to strengthen and con- solidate its relations with the international community. To carry out this policy, Afghanistan has introduced various types of visas. Details regarding the various types of visas issued by Afghanistan are provided below.

Business visa. An entry visa is issued for business, economic, commercial, cultural, industrial purposes and for employment with nongovernmental organizations. A single-entry visa is used

to obtain a work permit visa, followed by a multiple-entry or stay

visa. A business visa can be obtained from the Consulate Section

of the Afghan Ministry of Foreign Affairs. The employer or spon-

sor must directly contact the relevant department of the Ministry of Foreign Affairs. To obtain the visa, the following documents must be submitted:

• Complete visa application form

• Two recent passport-size photos (size of ¾ centimeter)

• Valid passport, with a remaining validity period of at least six months

• Employment letter or a letter of introduction from the employer/ sponsor stating the purpose and duration of the individual’s stay

• Visa processing fee (usually payable in local currency)

Curriculum vitae (CV) of employee

• Copy of educational certificates

A short interview may also be required.

Tourist visa/visit visa. A tourist visa/visit visa is issued for for- eign nationals who intend to travel to Afghanistan individually or with a group for the purpose of touring Afghanistan or visiting



their relatives. Afghan missions issue this type of visa. This type of visa is valid for one month, which can be extended only once by the Ministry of Interior with the agreement of the Afghan Tourism Organization.

Work permit visa. A work permit visa is usually issued to foreign nationals who are interested in working in Afghanistan. The Ministry of Labor and Social Affairs issues a work permit visa for a normal fee of US$150. The following documents must be submitted with respect to an application for a work permit visa:

• Application for work permit on company letterhead

• Original passport and entry visa

• Original educational certificates (attested by foreign office of individual’s country)

• Employee job description

• Copy of invitation letter from the employer that was sent for entry visa

• Four latest passport-size photographs of employee

• Color photocopy of passport of employee, including pages with picture and particulars of the passport holder

• Copy of registration certificate of company or firm registered in Afghanistan or with AISA (original must be ready for pre- sentation at all times)

• Contract letter with Ministry of Labor and Social Affairs (this is a pro forma contract available at all ministries)

Resident visa. The Ministry of Interior issues resident visas to foreign nationals holding ordinary passports who have already entered Afghanistan with a proper visa. The validity of this type of visa is from one month to six months and can be extended.

Diplomatic visa. The diplomatic visa is issued to diplomatic pass- port holders who intend to travel to Afghanistan. Diplomatic passport holders can obtain this type of visa from the Afghan missions abroad. However, they must contact the Section of Diplomatic Passport and Diplomatic Visa of the Afghan Ministry of Foreign Affairs directly through their mission in Kabul.

Exit visa. An exit visa is issued to the foreign nationals who have entered the country with a work permit visa. The validity of this type of visa is one to six days. In some circumstances, its dura- tion can be extended. All Afghans with dual citizenship are re- quired to obtain a visa exception letter from Afghan embassies or consulates abroad.

Other information and regulations. The Ministry of Foreign

Affairs strongly recommends all visitors extend their visa prior to expiration, if they wish to stay longer than the permitted duration. If the visa is not extended by the expiration date, a penalty of US$2 for each day during the first 10 days of the delay is im- posed on the holder of the passport, and a penalty of US$4 per day is imposed for the next 10 days of the delay (the penalty can be paid at ports). If the delay is more than 30 days, an additional penalty of US$10 per day is imposed, and the holder is deported.

Visitors are strongly recommended to register with their embassy in Kabul, the local Afghan Police Department and the Afghan Tourist Organization (if the visit is for tourism purposes only) on arrival.




GMT +1

Ernst & Young Dibra Str. “Observator” Building 7th Floor 1001 Tirana Albania

Executive and immigration contacts

Dr. Alexandros Karakitis

Nevena Kovacheva

(resident in Sofia, Bulgaria)

Jona Bica

Juliana Xhafa

+355 (4) 241-9571, Ext.111 Email: +359 (2) 817-7146 Email: +355 (4) 241-9575, Ext.130 Email: +355 (4) 241-9575, Ext.119 Email:

+355 (4) 241-9575, Ext.130 Email: +355 (4) 241-9575, Ext.119 Email:
+355 (4) 241-9575, Ext.130 Email: +355 (4) 241-9575, Ext.119 Email:
+355 (4) 241-9575, Ext.130 Email: +355 (4) 241-9575, Ext.119 Email:
+355 (4) 241-9575, Ext.130 Email: +355 (4) 241-9575, Ext.119 Email:

A. Income tax

Who is liable. Individuals who are resident in Albania are subject to tax on their worldwide income. Nonresidents are subject to tax on income derived from Albania sources only.

The following individuals are considered resident for tax pur- poses in Albania:

• Individuals who have a permanent residence, family or vital interests in Albania.

• Albanian citizens serving in a consular, diplomatic or similar position outside Albania.

• Individuals who reside in Albania consecutively or nonconsec- utively for at least 183 days during a tax year, regardless of their nationality or country of vital interests. The calculation of the residence period in Albania includes all of the days of physical presence, including holidays.

Income subject to tax. Individuals are subject to tax on the fol- lowing types of income:

• Employment income

• Self-employment and business income

• Dividends

• Interest from bank deposits and securities

• Royalties

• Income from rentals and leases of real property and loans

• Income derived from transfers of ownership rights over immov- able property

• Income derived from transfers of quotas and shares

• Income derived from gambling and other games of chance

• Other income

These categories of income are described below.

Employment income. Employed persons are subject to income tax on remuneration and all benefits received from employment. Employment income includes the following:



• Salaries, wages, allowances, bonuses, and other remuneration and benefits granted for services rendered in a public office or in private employment • Directors’ fees

Self-employment income. Self-employed individuals must regis- ter as individuals with the Commercial Register for tax purposes. Income derived by individuals from independent professional services and self-employment activities that generate more than ALL 2 million are subject to tax at a rate of 10%. The tax base equals the difference between total gross income and total deductible expenses.

Small businesses that generate annual turnover of up to ALL 2 million are subject to a fixed tax obligation that varies according to the type of business activity and the location of the business. The following table provides the annual small business tax rates for businesses located in the municipalities of Durres and Tirana.

Type of activity

Tax (ALL)

Retail sales








Independent professional services and self-employment


Mobile sales (sales by ambulatory merchants)


Dividends. Dividends received by individual shareholders or part- ners in commercial companies are subject to tax.

Amounts received for decreases in the total of participation quo- tas or capital withdrawals by partners or owners of initial capital are considered dividends received and are taxed to the extent that the amounts are paid out of the company’s capitalized profits and not from contributions in cash or in kind by the owners.

Interest from bank deposits or securities. Bank interest and inter- est on securities, other than interest generated from government treasury bills or other securities issued before the law “On income tax” entered into force in 1999, are included in taxable income.

Royalties. Taxable royalties (intellectual ownership payments) are considered to be income generated from the use of, or the right to use, literature, artistic or scientific works, including mov- ies, tapes, radio records, patents, trademarks, sketches or models, designs, secret formulas, technological processes and industrial, commercial or scientific information.

Income from rentals and leases of real property and loans. Taxable income from rentals and leases of real property and loans includes any periodic compensation in cash or in kind that an individual generates from the leasing of real estate and lending of replaceable items (for example, funds).

Income derived from transfers of ownership rights over immovable property. The taxation of income derived from transfers of owner- ship rights over immovable property is discussed in Capital gains.

Income derived from transfers of quotas or shares. The taxation of income derived from transfers of participation quotas or capi- tal shares is discussed in Capital gains.



Income derived from gambling and other games of chance. The payer of income from gambling and other games of chance must withhold a 10% tax and remit it to the tax authorities within 24 hours after making the payment.

Other income. Other forms of income include all types of income that are not identified in the categories mentioned above. This category includes the following:

• Income from sponsoring (for example, individuals not regis- tered with tax bodies receive sponsoring from different sources and use the sponsorship for artistic or sports activities).

• Income from professional activities, including teaching, train- ing and publishing articles in newspapers if the beneficiary is not registered with tax bodies and if such activities are of a temporary or secondary character.

• Income realized from collecting and selling metals.

• Cash contributions to share capital. Such contributions are tax- able if they have not yet been taxed or if no sufficient evidence exists that they originate from sources that are excluded from the scope of Albanian taxation or that they are exempt from tax for other reasons.

Exempt income. The following types of income are exempt from personal income tax:

• Income received from obligatory and voluntary schemes for life insurance, pensions and health insurance and allowances for families or individuals with no or low income.

• Scholarships received by students.

• Allowances received for diseases or disasters, up to 20% of the annual employment income earned by the recipient of the allowance.

• Benefits in cash or in kind granted to former landowners as compensation for an expropriation effected by the government for the public interest. This exemption must be proven by legal documentation explaining the nature of the income.

• Compensation for damages received from insurance companies.

• Income in kind, such as food (antidotal), received from busi- nesses that are allowed to pay such income under the law.

• Income excluded by international agreements approved by the Albanian parliament.

• Indemnities received by former political prisoners.

• Life and health contributions made by employers for the benefit of employees.

• Compensation for damages ordered by final court decision.

• Prizes received from the government for achievement in sci- ence, sport or culture.

Taxation of employer-provided stock options. No specific rules in

Albania govern the tax treatment of employer-provided stock options. Stock options are subject to personal income tax at the moment of exercise.

Capital gains

Transfers of ownership rights over immovable property. Capital gains derived from disposals of real estate are subject to tax. The tax base equals the amount by which the sale price exceeds the acquisition cost. Transfers caused by donations are also consid- ered. The value of the property taken into account on transfer may not be less than the “reference price” for such property. For



this purpose, the “reference price” is the objective value per meter in the relevant area, as indicated in the reference table published by the Albanian Institute of Statistics for the main Albanian cities.

Transfers of quotas or shares. Capital gains derived from trans-

fers of participation quotas or capital shares include income from sales of quotas owned by partners in businesses or partnerships, income from sales of shares and income from sales or liquida- tions of businesses. The tax base is equal to the following:

• Shares: difference between the sales value of the shares and nominal value or the purchase value

• Capital participation quotas: difference between the sales value and nominal value or the purchase value

• Liquidation: difference between the sales value or liquidation value of a business and book value

Capital losses. Capital losses are not deductible for tax purposes.

Deductible expenses. In general, the gross amount of income is

subject to tax and deductions do not apply. However, tax residents can claim deductions for the following expenses:

• Voluntary contributions to pension fund schemes and life and health insurance premiums

• Interest on bank loans used for the education of dependent fam- ily members

• Health care expenses for medical treatment that are not covered by the health insurance

• Tax on buildings


Employment income. Wages, salaries and compensation relating to employment are taxed at the rates set forth in the following table.

Monthly taxable income



Not exceeding







10% of total taxable income

Other types of income. Albanian resident entities, government institutions and other specified entities must withhold a 10% tax from all other types of income paid. This tax is considered to be a final tax. For a discussion of the types of income subject to tax in Albania, see Income subject to tax.

B. Other taxes

Annual Real Estate Tax. Annual Real Estate Tax (ARET) is imposed annually on all completed buildings based on the area in square meters of the building for each floor of the building above and below the ground. The annual tax ranges from ALL 5 to ALL 200 per square meter, depending on the municipality where the property is located. The annual tax is ALL 200 per square meter for buildings located in the municipalities of Durres and Tirana.

Tax on hotel accommodation. The tax on hotel accommodation equals 5% of the accommodation price and is payable in the municipality or the commune by the fifth day of the following month.



Tax on waste disposal. The tax on waste disposal is determined at the municipality level. It is payable by individuals and legal enti- ties residing or performing economic activity in the municipality.

C. Social security

Contributions. Employers and employees contribute to a social security fund a percentage over the calculated monthly salary. The total contribution is 27.9%, of which 16.7% is paid by the employer, and 11.2% is paid by the employee. The contribution consists of a social security contribution of 24.5% and a health security contribution of 3.4%. The contribution is calculated on the monthly salary, from a minimum amount of ALL 18,295 to a maximum amount of ALL 91,475. The contribution must be paid to the tax authorities by the 20th day of the following month.

Self-employed persons must pay a contribution of 30% of the minimal salary, which is ALL 18,295.

Totalization agreements. To provide relief from double social security taxes and to assure benefit coverage, Albania has entered into a social security agreement with Turkey.

D. Filing and payment procedures

The tax year in Albania is the calendar year.

Employers must withhold personal income tax from wages and compensation paid, and they must pay the withholding tax to the tax administration by the 20th day of the following month. Employers must maintain records of payments in accordance with instructions issued by the Ministry of Finance.

Individuals earning income of ALL 2 million or more must file a personal income tax return for the preceding year by 30 April. Income taxed at source must also be declared, but no personal income tax is calculated on such income.

E. Double tax relief and tax treaties

Tax treaties. Albania has entered into double tax treaties with the following jurisdictions.











Korea (South)











Czech Republic















Albania has signed tax treaties with Estonia, Kuwait, Luxembourg, Qatar and the United Kingdom, but these treaties have not yet entered into force.



Foreign tax credit. Resident taxpayers may credit the foreign income tax paid in other countries on the income realized in such countries. The amount of the foreign tax credit may not exceed the amount of Albanian tax regarding such income.

F. Entry visas

Albania issues the following temporary visas:

• Type A visas, which are transit visas permitting a visit or transit passage. Holders of transit visas may not undertake employ- ment or engage in profit-seeking activities.

• Type C visas, which allow the holders to stay in Albania up to 90 days in a 180-day period.

• Type D visas, which are issued to individuals who are planning to stay in Albania for more than 90 days within a 180-day period and who plan to apply for a residence permit. Such visas can be issued for the purposes of work, study, humanitarian activities or family reunion.

The following types of persons can enter, stay and travel through Albania without a visa:

• European Union (EU) citizens

• Holders of a valid multi-entry Schengen visa, Type C or D

• Holders of a valid residence permit in one of the Schengen member states

• Citizens of countries with which Albania has entered into inter- national agreements

• Other persons, based on the principle of reciprocity as enacted by a Council of Ministers’ decision

G. Work permits

The Labor and Social Issues Ministry is in charge of the policies for the employment of foreign citizens. Work permits are issued to foreigners by local institutions (labor office, immigration sec- tor) and the Directory of Immigration in Labor and Social Issues.

Foreigners must apply for either a work permit or a work registra- tion certificate. Citizens of the EU and Schengen area are exempt from the obligation to apply for a work permit or a work registra- tion certificate.

The work registration certificate is issued for a period of 60 days to 90 days within one year for the following categories:

• Consultants and audit service providers

• Artists and technical staff in cultural activities

• Technical staff provided by foreign companies for technical services

• Lecturers

• Personnel of international transport in Albania and certain other persons

The work permit can vary depending on the type of economic activity that the foreigners will perform in Albania. Type A/P work permits are issued to employees who have legally entered Albania, fall in the list eligible for this type of permit and have regular employment contracts.

Type A/P work permits are issued for the following terms:

• One-year term for the first application

• Two-year term, renewable two consecutive times



• Permanent term, after the expiration of the second two-year term for the work permit

To obtain a Type A/P work permit, the following documents must be submitted:

• Application form

• Passport (expiration date at least three months after the visa expiration date)

• Copy of passport information regarding generalities and other important information

• Individual employment contract or secondment contract between the foreign entity, the local entity and the individual employee

• If the above documents are filed by an authorized party instead of the individual, an authorization signed by the individual

• University degree certificate

• Five passport-size pictures

• Receipt for fee payment (ALL 6,000)

H. Residence permits

Foreign citizens who plan to stay in Albania for more than 90 days within a 180-day period and who have entered Albania with a Type D visa or without a visa can apply for a residence permit. The duration of a residence permit may be three months, six months, one year, two years or five years, or the permit may be permanent. Residence permits with the first three periods of duration can be renewed up to five consecutive times. The two- year residence permit may be renewed only one time. Foreigners may apply for a permanent residence permit if they have had a legal residence in Albania for five consecutive years and have a permanent activity. To obtain a residence permit, the following documentation must be submitted:

• Application form

• Passport (valid for at least three months after the expiration date of the visa)

• Copy of passport information regarding generalities and other important information

• Criminal Records Clearance of the individual extracted in the last six months

• Rent or purchase contract for an apartment or house in Albania

• Personal/Family Certificate translated in Albanian, released in the last six months

• Two passport-size pictures

• Declaration from the host or employer about the purpose of stay

• Photocopy of the work permit or the professional license

• Medical report (for citizens of and coming from countries affected by epidemics)

• Fee payment receipt

The amount of the application fee depends on the duration of the resident permit. The following are the amounts of the fee.

Duration of permit




ALL 5,000 + document charge



ALL 5,000 + document charge



ALL 10,000 + document charge



ALL 15,000 + document charge


ALL 25,000 + document charge



I. Personal and family considerations

Marital property regime. The marriage property regime is based on the concept of common ownership, which means that prop- erty acquired after the marriage is deemed to be in joint owner- ship, unless otherwise agreed between spouses. The law distin- guishes the separate property from the joint property of spouses even after the marriage. The following is considered separate property:

• Property that belongs to the spouse before the marriage and remains his or her property. • Property acquired during marriage through inheritance, dona- tion or other forms of legal acquisition.

Joint property is the property and income acquired through work during the course of the marriage, and the spouses are considered to be joint owners in equal share unless otherwise provided in a written agreement in accordance with the requirements of the law.

Forced heirship. Albanian succession law provides for forced heir- ship for children under the age of 18 and disabled dependants.

Drivers’ licenses. Expatriates with valid residence permits may drive legally in Albania with their home-country drivers’ licenses if their home-country licenses are valid and if they have official translations of their licenses into Albanian or English.





Ernst & Young Algeria Business Center Tower Pins Maritimes — El Mohammadia Algiers Algeria

Executive and immigration contacts

Frédéric Laureau

(resident in Paris)

Samia Benboudjema

+33 (1) 55-61-18-77 Email: +213 21-89-11-56 Email: samia.benboudjema@ey-avocats. com

A. Income tax

Who is liable. Individuals who are tax resident in Algeria are sub- ject to income tax on their worldwide income. Individuals who are not tax resident in Algeria are subject to tax on their income from Algerian sources.

The following individuals are considered to be tax resident in Algeria:

• Individuals who are owners or beneficial owners of a home in Algeria

• Individuals who are tenants in Algeria with a rental term of a continuous period of at least one year, whether by single or by successive agreements

• Individuals who have their place of principal residence or the center of their main interests in Algeria

• Individuals working in Algeria, regardless of whether they are paid

• Agents of the Algerian government who serve at a mission in a foreign country and who are not subject in the foreign country to a personal tax on all of their income

Income subject to tax

Employment income. Employment income is included in annual taxable income. It includes salaries, wages, pensions, life annui- ties and benefits in kind, except for certain items, such as food, housing, heating and lighting.

Self-employment and business income. Income derived by self- employed individuals is divided into the following two catego- ries:

• Business profits, which are profits derived by individuals from commercial, industrial, artisanal or mining activities

• Nonmarket benefits, which are profits derived by individuals from artistic and scientific occupations

The tax base for self-employed individuals engaged in activities in the above two categories is computed in the same manner as the tax base for corporations. Taxable income equals the



difference between gross income and expenses incurred for the performance of the activity during the calendar year.

Individuals may elect to use different regimes for the taxation of their revenues. The election of these regimes depends on the category of self-employment.

For the category of business profits, the taxpayer may elect one

of the following regimes:

• Real regime, which is mandatory for taxpayers whose annual turnover exceeds DZD 30 million • Simplified regime, which applies to taxpayers whose turnover

does not exceed DZD 30 million

Income earned by taxpayers under the simplified regime is sub-

ject to personal income tax (impôt sur le revenu global, or IRG)

at a rate of 20%. This tax is levied at source.

Income under the real regime is subject to IRG at the tax rates set forth in Rates.

Income derived by taxpayers under the category of nonmarket business is subject to IRG at a rate of 20%. This tax is levied at source.

Investment income. Dividend distributions are subject to a final withholding tax at a rate of 10% for residents and 15% for non- residents.

Revenues from loans and deposits are subject to 10% withhold- ing tax. However, for interest earned on monies deposited in savings accounts of individuals, the following are the withhold- ing tax rates:

• 1% for the portion of interest payments not exceeding DZD 50,000 • 10% for the portion of the interest payments exceeding DZD 50,000

Directors’ fees. Directors’ fees are fees paid to directors of com- panies as compensation for the performance of their functions. Directors’ fees are considered distributions of income. Consequently, they are subject to a withholding tax at a rate of 10% for residents and 15% for nonresidents.

Taxation of employer-provided stock options. The Algerian Direct

Tax Code does not contain any specific measures relating to the taxation of stock options granted to employees.

Capital gains. Capital gains derived from the transfer of tangible property during the course of a nonbusiness activity are not taxable.

The taxation of gains derived from the transfer of capital assets depends on whether the assets are short-term or long-term assets. Capital assets are considered long-term assets if they have been held more than three years. Thirty-five percent of gains on long- term assets are included in taxable income. Capital assets that are not long-term assets are considered short-term assets. Seventy percent of gains on short-term assets are included in taxable income.

A 20% final withholding tax is imposed on gains derived by

nonresidents in Algeria.



Capital gains on share transfers are subject to a final withholding tax at a rate of 10% for residents and 15% for nonresidents.


Personal deductions and allowances. Taxpayers may deduct cer- tain expenses from employment income including social insur- ance contribution, support payments and insurance premiums paid as an owner or lessee.

Business deductions. Business deductions include depreciation and general expenses incurred for business purposes. Depreciation of business assets is deductible if it is recorded annually in the accounts and relates to assets shown in the balance sheet. The deprecation rates vary according the nature of the activity in which the assets are used.

Other deductions. After the net income for each category of income is aggregated, the following expenses are deductible:

• Interest paid on loans obtained by a taxpayer for a business purpose or the acquisition or construction of a principal home

• Contributions paid by a taxpayer for a retirement pension or social insurance

• Maintenance allowance

• Insurance policy concluded by a landlord

Rates. The following are the progressive personal income tax rates in Algeria, which apply to employment income and business profits under the real regime (see Self-employment and business income):

Taxable income


Not exceeding
















All bonuses paid by the employer on a nonmonthly basis are subject to a reduced rate of 10%. For this purpose, nonmonthly bonuses include amounts paid to persons in addition to the amounts paid to employees for their principal activities.

Relief for losses. In general, losses incurred in business and agri- cultural activities may be carried forward for four years to offset profits from the same category. Losses attributable to the depre- ciation of assets may be carried forward indefinitely.

Nonresidents. Individuals who are not tax resident in Algeria are subject to tax on their Algerian-source income. The types of income considered to be Algerian-source income include, but are not limited to, the following:

• Income from Algerian securities and capital assets

• Income from farms in Algeria

• Income from paid or unpaid professional activities carried out in Algeria

• Operations profits, as defined in Article 22 of the Algerian Direct Tax Code (self-employment profits), derived in Algeria



The following types of income are also considered Algerian-

source income if the payer of the income is resident for tax pur- poses or established in Algeria:

• Pensions and annuities

• Products that are specified in Article 22 and that are received by inventors or under copyrights and revenues from industrial and commercial property and similar rights

• Amounts paid as compensation for services provided or used in Algeria

B. Other taxes

Tax on donations. Donations are taxable on the basis of the value of donated property. The tax rate is 3% for donations between parents, children and spouses. The same rate applies to the fixed assets of a company that heirs agree to continue operating. This tax does not apply to donations to nonfamily members.

Wealth tax or net worth tax. Individuals who are tax resident in Algeria are subject to wealth tax on their property located in Algeria and abroad. Individuals who are not tax resident in Algeria are subject to wealth tax on their property located in Algeria. The tax is assessed on 1 January of each year.

The following are the rates of the wealth tax.

Taxable net value


Not exceeding






















Property tax

Developed properties. The property tax is payable annually on buildings located in Algeria, except those that are specifically exempt. Facilities also subject to this tax include, but are not limited to, the following:

• Facilities to house people and goods, or to store products

• Commercial facilities within the perimeters of airports, port terminals and railway and bus stations

The tax base is the tax rental value of the property, which is based on the cadastral value determined by the Algerian administration. An allowance rate of 2% is applied each year to reflect obsoles- cence. However, in general, this deduction cannot exceed a maximum of 40%. For plants, this percentage is set at 50%.

The tax rate for buildings is 3%. However, a 10% rate applies to buildings for residential use that are not employed in a personal or family capacity as a rental in areas to be determined by regulation.

The following are the tax rates for land considered dependency property (land attached to the building property):

• 5% if the size is less than or equal to 500 square meters



• 7% if the size is greater than 500 square meters and not more than 1,000 square meters

• 10% if the size is greater than 1,000 square meters

Undeveloped properties. Property tax is imposed annually on all undeveloped properties, except those that are specifically exempt.

The tax base is the tax rental value of the property.

The tax rate is 5% for undeveloped properties located in nonur- banized areas.

For urbanized land, the following are the tax rates:

• 5% if the land size is less than or equal to 500 square meters

• 7% if the land size is more than 500 square meters and less than or equal to 1,000 square meters

• 10% if the land size is greater than 1,000 square meters

The rate is 3% for agricultural land.

For properties located in urbanized or urbanizing areas on which construction has not begun in five years, the property tax rate is increased to 100%.

C. Social security

Social security contributions are based on gross compensation paid, including fringe benefits and bonuses. Some benefits paid on an exceptional basis can be exempt from social security con- tributions under certain circumstances.

Contributions. Employer contributions are paid and employee contributions are withheld monthly. The rate of the social secu- rity contributions are 26% for employers and 9% for employees.

Coverage. All foreign workers from countries with which Algeria has entered into social security agreements who are pursuing an activity in Algeria while maintaining an employment contract with their employers abroad may elect to be subject to the social security system of their home countries and be exempt from social security contributions in Algeria. To implement this elec- tion, the employer must give a copy of a detachment certificate (certificat de détachement) to the employee, who then submits it to the national social security fund (Caisse Nationale des Assurances Sociales, or CNAS).

Totalization agreements. Algeria has entered into social security agreements with Belgium, France, Romania and Tunisia.

D. Tax filing and payment procedures

The Algerian tax law provides for monthly, quarterly and annual tax returns.

The monthly tax return (G50) applies only to businesses under the real regime. This tax return must be filed by the 20th day of each month.

The quarterly tax return applies only to businesses under the simplified regime. It must be filed by the 20th day of the month following the end of the quarter.

An annual tax return must be filed by 30 April of each year.



E. Double tax relief and tax treaties

Algeria has entered into double tax treaties with the following jurisdictions.

Arab Maghreb








South Africa





Korea (South)
















United Arab








F. Entry and tourist visas

Entry visas are required for nationals of the European Union (EU), United States and certain Arabic countries, such as Egypt. Moroccan and Tunisian nationals are not required to have entry visas.

Algerian embassies or consulates can provide information regarding the documents necessary for the obtaining of a tourist visa.

Foreign nationals who wish to enter Algeria for a period not exceeding 15 days can enter with a business visa. This visa allows the holding of meetings (internal or with clients) but not the provision of services.

Foreign nationals who wish to work in Algeria under a contract that has a duration of less than three months must obtain a tem- porary work authorization. It can be renewed once in a year. Under Article 9 of Law No. 81-10, a foreigner who is assigned in Algeria for a duration of less than 15 days does not require a temporary work authorization. However, a temporary work visa

is always required. To obtain the visa, a foreign national must

justify his or her work in Algeria.

After the granting of a temporary work authorization and work visa, a work permit is required. A work permit’s validity may not exceed two years, but it is renewable. French nationals benefit from a special regime. They need to obtain a foreign worker declaration instead of a work permit.

A foreign worker working as a managing director of an Algerian

entity is exempt from the work permit requirement but needs a business professional card and, in some circumstances, a resi- dence card as well.

G. Residence card

Foreigners who are intending to extend their stay in Algeria beyond the duration specified in the visa must request a residence card 15 days before expiration of the visa’s validity. This card is valid for two years. A residence card with a validity of 10 years can be issued after a regular residency of 7 years in Algeria.



The application form for the residence card must be sent to the local police office.

H. Family and personal considerations

Family members intending to reside with a working expatriate in Algeria can benefit from family reunification.




GMT +1

Ernst & Young Presidente Business Center Largo 17 de Setembro, No. 3 4th Piso – Sala 441 Luanda Angola

Executive contacts

Luis Marques

+244 222-371-390/461

António Neves

Fax: +244 222-336-295 Lisbon: +351 217-912-000 Lisbon fax: +351 217-957-590 Email: +351 217-912-249

(resident in Lisbon)

Fax: +351 217-957-592

Alexandre Fernandes

Email: +244 222-371-390/461 Lisbon: +351 217-912-295 Fax: +244 222-336-295 Lisbon fax: +351 217-957-592 Email:

At the time of writing, a tax reform had been proposed but had not yet been fully enacted. Section F of this chapter sets out the most relevant changes for 2014 based on the proposed law. However, because of the uncertainty regarding the enactment of the proposed changes and the effective date of these changes, readers should obtain updated informa- tion before engaging in transactions.

A. Income tax

Who is liable. Individuals receiving work-related income and/or business and professional income in Angola are subject to tax if the compensation is paid by an Angolan entity or if the respective cost of such income is allocated to an entity with a head office, residence or permanent establishment in Angola. Angola applies a pure source-based system for individual taxation. Consequently, the Angolan law does not provide tax-residence criteria for deter- mining who is liable for tax in Angola.

Income subject to tax

Employment income. All employment income is subject to tax, including wages, salaries, directors’ fees, leave payments, fees, gratuities, bonuses, and premiums or allowances (for productiv- ity or reaching certain goals), paid in cash or in kind. Allowances for travel and certain other expenses (for example, costs incurred for meals while representing the employer) are taxable to the extent that the amount paid to the employee exceeds the limits applicable to civil servants.

Self-employment income. Self-employed individuals are taxed on actual profit, which is gross revenue less deductible expenses



(see Business deductions). In certain cases, business income is subject to Industrial Tax (corporate income tax).

Investment income. Income derived from the use of capital is generally subject to withholding tax. Interest on loans and late payment charges are taxed at a rate of 15%. Dividends, interest

on bonds, interest on shareholder loans and royalties are taxed at

a rate of 10%.


Deductible expenses. No deductions from employment income are allowed, except for social security contributions.

Business deductions. The following expenses are deductible if properly documented:

• Rent paid for business premises

• Wages (subject to a maximum of wages paid to three employees), commissions and fees paid for services

• Water, gas, telephone and electricity expenses

• Insurance premiums

• Other necessary expenses required to carry out the taxpayer’s business

• Depreciation of the business premises

The total deduction for the above expenses is limited to 30% of the taxpayer’s total income if the taxpayer does not have an orga- nized accounting regime.

Rates. Income tax rates applicable to taxable employment income derived by residents and nonresidents are set forth in the follow- ing table.

Taxable income

Tax on lower

Rate on


Not exceeding






























































Individual business owners receiving salary income are taxed at

a flat rate of 20%.

Income from self-employment is taxed at a rate of 15% (levied on 70% of gross income).

Capital gains and losses. Capital gains derived from the disposal of business assets of self-employed individuals are included in operational profits and taxed at the regular Industrial Tax (corpo- rate income tax) rate of 35%. Capital gains from the disposal of



securities, other than those subject to Personal Income Tax or Industrial Tax, are taxed at a rate of 10% under the Investment Income Tax.

Capital losses may not be carried forward or back. However, under the Industrial Tax, tax losses may be carried forward for three years.

B. Other taxes

Inheritance and gift tax. Inheritance and gift tax is payable by heirs and donees. This tax is levied on gratuitous transfers of movable and immovable assets and rights located or transferred in Angola. Tax rates range from 10% to 30%, depending on the value of the estate or the gift and on the relationship of the heir or donee to the deceased person or donor.

Property tax. Property tax is levied at a rate of 25% or 0.5% on the official assessment value of real property, which is deter- mined, respectively, based on 60% of the charged rent or on the patrimonial value of the property.

Property transfer tax. Property transfer tax is levied at rate of 2% with respect to transfers of immovable property, including long- term leases (20 years or more).

C. Social security

Salaries and additional remuneration specified under law are subject to social security contributions. No ceiling applies to the amount of remuneration subject to social security contributions. The rates of the contributions are 8% for employers and 3% for employees.

Employees working transitorily in Angola are not required to make social security contributions if they can prove that they are covered by the social security system in another country.

Self-employed persons are subject to social security contribu- tions based on a predefined monthly notional salary. The rate of the contributions is 8%, but it may be increased to 11% if addi- tional benefits are covered.

D. Tax filing and payment procedures

The fiscal year in Angola is the calendar year.

Self-employed individuals must file returns (Form M/1) in January following the tax year-end and are notified of their final tax liability. Income taxes on employees are withheld by the employer under a Pay-As-You-Earn (PAYE) system, and employ- ees are not required to file returns.

Tax on income from capital is generally withheld by the payer. Otherwise, the recipient is responsible for paying the tax.

Landlords must also file Urban Property Tax Form M/1 in January. Payments (whenever the rents are not subject to with- holding tax) must be made in two installments, which are payable in January and July. Alternatively, a request may be presented to the tax administration to make the payments in four installments, which are payable in January, April, July and October.



E. Tax treaties

Angola has not entered into any double tax treaties, but treaties are being negotiated.

F. Proposed tax reform

At the time of writing, a tax reform had been proposed but not yet fully enacted. Based on information obtained by the Ministry of Finance, the proposed amendments are expected to enter into force on 1 January 2014. The following are the most significant tax changes in the proposed tax reform affecting individuals:

• Caps will be introduced for the allowances not subject to tax, which are termination payments, holidays and Christmas subsi- dies and the daily meals allowance.

• Although the 50% tax exemption will continue to be available for housing allowances, the full amount is taxable if the rental agreement is not submitted to the tax authorities.

• It will be clarified that income from work or services is subject to tax in Angola if the work or services are performed for an Angolan entity (including a permanent establishment of a for- eign entity). Consequently, taxation will not be limited to work or services performed in Angola.

• The tax exemption for taxpayers who are more than 60 years old and for individuals rendering military service will be eliminated.

• Business income earned by individuals will become subject to Personal Income Tax rather than Industrial Tax.

• The tax rate applicable to self-employed individuals will be increased from 15% to 20% (the increased tax rate will also be levied on 70% of gross income).



Buenos Aires

GMT -3

Ernst & Young – Pistrelli, Henry Martin y Asociados SRL 25 de Mayo 487 Fourth and Fifth Floors C1002ABI Buenos Aires Argentina

Executive and immigration contacts

Eduardo Perelli

+54 (11) 4510-2274

Osvaldo Flores

Fax: +54 (11) 4318-1777 Email: +54 (11) 4510-2274

Javier Sabin

Fax: +54 (11) 4318-1777 Email: +54 (11) 4318-1681

Vanesa Politis

Fax: +54 (11) 4318-1777 Email: +54 (11) 4318-1681

María Bárbara López Lagoria

Fax: +54 (11) 4318-1777 Email: +54 (11) 4318-1681

Valeria Dworski

Fax: +54 (11) 4318-1777 Email: maria-barbara.lopez-lagoria +54 (11) 4318-1681

Romina Henrique

Fax: (11) 4318-1777 Email: +54 (11) 4318-1681

Andrés Tellado

Fax: +54 (11) 4318-1777 Email: +54 (11) 4318-1681

Micaela Benayas

Fax: +54 (11) 4318-1777 Email: +54 (11) 4318-1681 Fax: (11) 4318-1777 Email:

A. Income tax

Who is liable. Residents are subject to tax on worldwide income. Nonresidents are taxed on Argentine-source income only.

The following individuals are deemed to be resident in Argentina:

• Native and naturalized Argentine citizens

• Foreign individuals who are granted permanent residence in Argentina

• Foreign individuals who remain in the country under temporary authorization for a period of 12 months or longer

Individuals in the third category who have not been granted per- manent residence are deemed to be nonresident if they can prove that they do not intend to stay permanently in Argentina.

Foreign individuals who can prove that they are in Argentina because of their employment, and who remain in the country for



a period not exceeding five years, are not considered to be resi-

dent in Argentina. This rule also applies to members of the indi- vidual’s family who accompany the individual to Argentina.

Income subject to tax. The taxability of various types of income is discussed below.

Employment income. Taxable income from employment includes all salaries, regardless of the taxpayer’s nationality or the place where the compensation is paid or the contract is concluded. In general, taxable compensation also includes most employer-paid items, except moving expenses.

Educational allowances provided by employers to their local or expatriate employees’ children who are 18 years old or under are taxable for income tax and social security purposes.

Self-employment income. Self-employment and business income is taxable, regardless of the recipient’s nationality, the place of payment or where the contract was concluded.

Investment income. In general, dividends from Argentine corpo- rations paid to residents or nonresidents are not taxable. How- ever, if a company pays a dividend in excess of its accumulated

taxable income, the excess is subject to a final withholding tax at

a rate of 35%. Dividends from foreign corporations paid to resi-

dents are taxable. Royalties and income derived from renting real property are taxed as ordinary income. Interest is taxed as ordinary income, except interest from certain bank deposits in Argentina

and Argentine government bonds, which is tax-exempt. Interest from bank deposits paid to nonresidents is exempt from Argentine tax only if the income is also exempt from foreign tax.

Directors’ fees. Directors’ fees are taxed as self-employment income to the extent that they are deducted by the payer company (allowable up to the greater of 25% of book profit or ARS 12,500 per director per year). The portion of fees not deductible at the corporate level is not taxable to the director if the amount of the company’s income tax increases by an amount equal to the tax attributable to the directors’ fees. Directors’ fees paid by Argen- tine companies are considered Argentine-source income, regard- less of where the services are performed.

Taxation of employer-provided stock options. Stock options grant-

ed to employees are deemed to be payments in kind and are therefore subject to income tax and social security withholding. Taxable income is recognized at the time the option is exercised in an amount equal to the difference between the strike price and the fair market value of the stock on the date of exercise.

Capital gains. In general, capital gains are exempt from income tax, with certain specific exceptions.


Deductible expenses. For purposes of computing tax to be with- held from an employee’s salary, employers may deduct certain allowable expenses, including the following:

• Mandatory social security contributions

• Medical insurance payments for employees and their families, with certain limitations



• 40% of invoiced medical expenses up to a maximum of 5% of the taxpayer’s annual net income

• Expenses incurred by traveling salespeople based on estimates established by the tax authorities

• Donations to the government and certain charitable or non- profit institutions, up to 5% of net taxable income

• Burial expenses, up to ARS 996.23 annually

• Life insurance premiums, up to ARS 996.23 annually

• Mortgage interest, up to ARS 20,000 annually, for the purchase of a dwelling destined to be a permanent abode

• Tax on Bank Debits and Credits, subject to certain limitations

• Contributions made to Mutual Guarantee Companies (SGRs; special companies that guarantee loans)

• Compensation and employer contributions related to domestic help personnel, up to ARS 15,120 annually

Self-employed individuals may deduct expenses incurred in pro- ducing income, in addition to the expenses listed above.

Personal deductions and allowances. Employed and self-employed individuals are entitled to standard deductions in amounts estab- lished by law. The amounts for 2013 are ARS 16,800 for a spouse, ARS 8,400 for each child and ARS 6,300 for each other dependant. To qualify, dependants must reside in Argentina for more than six months in the tax year and may not have income in excess of ARS 15,120.

A deduction of ARS 15,120 is granted to taxpayers who are resi-

dent in Argentina for longer than six months during the calendar year.

A special deduction is available against compensation derived from

personal services. The annual amount is ARS 72,576 for employ-

ees and ARS 15,120 for self-employed persons.

Nonresidents residing in Argentina longer than six months in a calendar year may claim the deductible expenses actually incurred and exemptions available to residents.

Rates. The progressive tax rates applicable to Argentine residents for 2013 range from 9% to 35%.

The following table presents the 2013 individual income tax rates.

Taxable income

Tax on lower

Rate on


Not exceeding


































Nonresidents residing temporarily in Argentina, that is, for six months or less, are subject to final withholding tax. A standard deduction of 30% of compensation is allowed for expenses in- curred in earning income. The remaining 70% of compensation

is taxed at a flat rate of 35%, with no other allowable deductions



or exemptions, resulting in an effective withholding tax rate of


Relief for losses. Business losses of self-employed persons may be carried forward for five years. Foreign-source business losses may offset foreign-source income only.

B. Other taxes

Transfer tax. Sales of real estate are subject to transfer tax at a rate of 1.5% on the sale price.

Personal assets tax. Individuals with total assets subject to tax of up to ARS 305,000 are exempt from the personal assets tax. Individuals domiciled in Argentina with assets totaling more than ARS 305,000 are required to pay the personal assets tax for 2013 at the rates listed in the following table.

Total value of taxable assets



Not exceeding















Under the Substitute Taxpayer Regime, individuals domiciled in foreign countries are subject to personal tax on Argentine assets only at a rate of 1.25%. In this case, the minimum of ARS 305,000 does not apply.

Liabilities, other than those incurred for the purchase, construc- tion or improvement of a taxpayer’s home, are not deductible for purposes of the personal assets tax. A tax credit is allowed for similar taxes paid abroad.

Expatriates residing in Argentina on work assignments for a period not exceeding five years are considered to be domiciled in Argentina but they are taxed only on personal assets located in Argentina.

C. Social security

Contributions. Social security contributions are paid by employ- ees, employers and self-employed persons.

Employees. Employees’ social security contributions are with- held from their monthly salary.

Employees make contributions to the Pension Fund at a rate of 11%, to the Retiree’s Fund at a rate of 3% and to the health-care system at a rate of 3%. The maximum monthly tax base for the calculation of these contributions is ARS 21,248.45 for January 2013 and February 2013, and ARS 24,473.92 from March 2013 onwards.

Monthly salary that exceeds the maximum tax base is not subject to contributions. For this purpose, a year comprises 13 months.

Employers. Employers pay social security contributions at a rate of 21% or 17%, depending on the company’s activity and turn- over (amount of sales). A 6% contribution for medical care is required in addition to the social security contributions. The tax



base for employer social security contributions and health care contributions is not capped.

Other. No employee or employer social security taxes are payable with respect to directors’ fees. However, a director must pay fixed monthly amounts that are allocated to the social security’s Self- Employed System.

The social security tax law provides an exemption for all profes- sionals, researchers, scientists, and technicians who are contracted outside of Argentina to render services in Argentina for a period of not more than two years. The individuals must have a tempo- rary residence, be covered by the social security system of their countries, and provide evidence of their technical qualifications as well as of their coverage for death, disability and old age in their home countries or countries of residence. This exemption is available only once and, after being granted, it is in force from the date of the application for as long as the conditions for the exemption are met.

Totalization agreements. Social security taxes for nonresidents are collected as outlined above. However, both the employer and the nonresident employee may be exempt from contributions to the Argentine pension fund if certain conditions are met.

To provide relief from double social security taxes and to assure benefit coverage, Argentina has entered into totalization agree- ments with the following countries.



Southern Common Market



(Mercado Común del Sur,



or MERCOSUR) countries






* This treaty is not yet in force.

Argentina has also signed the Latin American Treaty of Social Security, which is not yet in force.

D. Tax filing and payment procedures

The tax year for individual taxpayers is the calendar year. Tax returns must be filed between 15 April and 21 April, depending on the taxpayer’s registration number) of the following year unless the taxpayer’s only income is from employee compensation. No extensions to file tax returns are allowed.

For the 2013 fiscal year, national and foreign employees must file an income and personal assets tax return for informational purposes if their gross compensation exceeds ARS 144,000 per year. If their compensation is higher than ARS 96,000, but lower than ARS 144,000, national and foreign employees must file tax returns reporting only their assets as of 31 December of the cur- rent year with the tax authorities.

Self-employed taxpayers must register with the tax authorities. Tax returns are filed annually in April, declaring earnings for the previous calendar year.

Individuals with nonwage income, including self-employment income, must make advance tax payments bimonthly from June



to February, based on the previous year’s tax. Under a withhold-

ing system for payments to resident individuals, withholding is imposed at various rates on income exceeding a minimum thresh- old. Amounts withheld are treated as advance payments.

Advance payments are also required for purposes of the personal assets tax (see Section B).

For married couples, a wife is taxed separately on income derived from personal activities (including employment, self-employment and business), on assets acquired before marriage and on assets acquired during marriage with income earned from personal activities.

Nonresidents subject to the 35% withholding tax are not required

to file tax returns.

E. Double tax relief and tax treaties

Resident taxpayers are entitled to a tax credit for income taxes paid abroad, up to the increase in Argentine tax resulting from the inclusion of the foreign-source income.

Argentina has entered into double tax treaties with the following countries.















United Kingdom


F. Types of residence

Under Law 25,871, the following are the three categories of entry:

• Transitory residence

• Temporary residence

• Permanent residence

These types of residence and other key aspects of the immigra- tion process in Argentina are discussed below.

Transitory residence

Technical residence. Technical residence applies to foreigners who will perform technical or professional activities for a short term. This type of residence can be obtained at the Argentinean consulate in the country of residence of the expatriate or at the Argentinean migratory office after arrival in Argentina.

Technical residence obtained at the Argentinean consulate is for

a 30-day period, which can be extended up to 90 days, at the

discretion of the immigration office. Technical residence obtained

at the Argentinean migratory office is for a 90-day period, which

cannot be extended, and it can be requested only twice a year.

Business residence. Business residence is issued to foreign nationals who were invited by a local commercial entity estab- lished in Argentina. This type of residence can be obtained only at the Argentinean consulate in the country of residence. This type of residence is for business issues only.



Temporary residence

Labor contract residence. Labor contract residence applies to foreigners who are regularly employed by a local company for a long period. This type of residence is valid for one year and may be extended indefinitely.

Intracompany transfer residence. Intercompany transfer resi- dence applies to employees who are transferred from a home country company to an Argentinean company for a long period. This types of residence is valid for one year and may be extended indefinitely.

Family reunification with temporary resident relative. Family reunification with temporary resident relative residence applies to foreigners who have a relative with temporary residence in Argentina. This type of residence is valid for the period of the temporary residence of the relative and may be extended indefi- nitely.

Rentier residence. Rentier residence applies to proprietors or pensioners who receive money in Argentina. This type of resi- dence is valid for up to one year and may be extended indefi- nitely.

Study residence. Study residence applies to students entering the country with the intention of carrying out studies at private or state-run establishments that are officially recognized. This type of residence is valid for up to one year and may be extended indefinitely.

MERCOSUR temporary residence. MERCOSUR temporary residence applies to foreigners born in the MERCOSUR coun- tries (Bolivia, Brazil, Chile, Colombia, Ecuador, Paraguay, Peru, Uruguay and Venezuela) who will work for a long period. This type of residence is valid for two years and may be extended indefinitely.

Investors. The Immigration Office considers an investor to be a person who makes a minimum investment of ARS 1,500,000 in Argentina and engages in a productive, commercial or service- supplying activity or who convincingly proves that he or she has ARS 1,500,000 destined for investment in these types of activi- ties. Prior experience in the relevant activities is desirable. The investor visa is valid for up to one year and may be extended indefinitely.

Permanent residence

Family reunification with a permanent resident relative. Family reunification with a permanent resident relative residence applies to foreigners who have a relative (parent, child or spouse) with permanent residence in Argentina.

Family reunification with Argentinean relative. Family reunifica- tion with Argentinean relative residence applies to foreigners who have an Argentinean relative (parent, child or spouse) in Argentina.

MERCOSUR citizens who live in Argentina for two years. Permanent residence for MERCOSUR citizens may be required after the elapse of the first period of temporary residence.



Non-MERCOSUR citizens who live in Argentina for three years. Non-MERCOSUR citizens can request permanent residence after they live in Argentina for at least three years.

Registration of local companies. The National Registry of Foreign

Personnel Requestors (Registro Nacional Único de Requirentes de Extranjeros, or RENURE) is the national registry in which all the local companies requiring foreign staff must be enrolled. The requesting person (private or public, physical or juristic) must be registered at RENURE to obtain the following types of residence:

• Technical residence

• Business residence

• Labor contract residence

• Intracompany transfer residence

• Study residence

Home country required documentation. To obtain temporary or

permanent residence, a criminal records certificate from the countries where the employee was living during the preceding three years is required.

The criminal records certificate needs to be legalized for Argentina. Under the Hague Convention, the document can have an apostille issued by the home country foreign affairs ministry. If the home country is not part of the convention, double legaliza- tion must be performed by the home country foreign affairs ministry and by the Argentinean consulate.

If an employee is accompanied by dependants, the required docu- mentation consists of the criminal records (for adults only) and the legalized family-ties certification.

Translation of required documents. All of the documents that are

not written in Spanish must be translated by an Argentinean sworn translator and legalized by the Argentinean Sworn Translators Association.

National Identity Card. The National Identity Card (Documento Nacional de Identidad, or DNI) is issued to foreigners with any type of temporary residence lasting one year or more.

The first application for the DNI can be made simultaneously with the application for temporary or permanent residence at the immigration office. Subsequent applications need to be sched- uled in advance at the Register Office for Natural Persons (Registro Nacional de las Personas, or RENAPER).

Social security number for Argentina. A social security number

(Codigo Unico de Identificación Laboral, or CUIL) for Argentina is required for all regularly employed foreigners.

G. Regulations on exchange foreign currency transactions

The Central Bank of Argentina (Banco Central de la República Argentina, or BCRA) has officially reported through Communiqué “A” 5318 that neither foreigners nor Argentine nationals are allowed to purchase foreign currency for hoarding purposes.

This regulation makes official the “green deadbolt” imposed through the Preinquiry Program for Exchange Transactions recently implemented by the Federal Administration for Public



Revenues (Administración Federal de Ingresos Públicos, or AFIP). Since 2012, the AFIP has been rejecting almost all trans- actions related to the purchase of foreign currency by individuals with the purpose of hoarding or marking them as pending for an indefinite period.

However, the AFIP has confirmed that purchasing foreign cur-

rency is still allowed with its approval, under certain scenarios, taking into consideration the individual’s wealth. The following are the scenarios:

• Tourism. Purchasers are required to file a sworn statement of the trip to be made, including how many days they will stay abroad. They must also commit to return the funds to local tax authorities in Argentina if the trip is cancelled within the next five working days after the date of cancellation.

• Imports.

• Acquisition of aircraft, ships or scientific equipment.

In addition, the BCRA has established that “due to recent chang- es in current regulations on the acquisition and sale of foreign currency and travelers checks to resident individuals, they can only be sold against debit to the customer’s bank account, pay- ment with their own checks or by a wire bank transfer from the customer’s bank account.”

Professional advice should be obtained regarding transactions involving the matters discussed above.




GMT +4

Ernst & Young 1 Northern Avenue Yerevan 0001 Armenia

Executive and immigration contacts

Zurab Nikvashvili

(resident in Tbilisi, Georgia)

Kamo Karapetyan

+995 (32) 243-9375, Ext. 2104 Fax: +995 (32) 243-9376 Email: +374 (10) 500-720, Ext. 2612 Fax: +374 (10) 500-706 Email:

As of 1 May 2013, Armenian drams (AMD) 410.98 equaled US$1.

A. Income tax

Who is liable. Resident individuals are subject to income tax on their worldwide income. Nonresident individuals are subject to income tax on only income received from Armenian sources.

For tax purposes, an individual is considered resident if he or she satisfies either of the following conditions:

• He or she resides in Armenia for 183 or more cumulative days in any continuous 12-month period ending in the current tax year (same as a calendar year).

• His or her center of vital interests (the place of a person’s fam- ily or economic interests) is in Armenia.

For the purpose of determining the residency status, days spent abroad by an individual as a civil servant of the Republic of Armenia (RA) are considered as days spent in the RA.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Taxable income from employment consists of all types of compensation or benefits, whether received in cash or in any other form, subject to certain exemptions.

Self-employment and business income. Tax is levied on an indi- vidual entrepreneur’s annual income, which consists of gross income less expenses (except for nondeductible or partially non- deductible expenses) contributing to the generation of the income.

Directors’ fees. Directors’ fees are included in taxable income.

Investment income. A 10% withholding tax is imposed on inter- est income and other compensation received by individuals from loans. Interest derived from treasury bonds and other state securi- ties is not taxable.

Exempt income. “Exempt income” represents part of the gross income of a taxpayer, which is deducted from gross income for



determination of taxable income. Income derived by individuals that is considered exempt includes, among other items, the fol- lowing:

• Dividends

• Contributions made by taxpayers on their behalf and/or by third-party taxpayers (including employers) within the volun- tary accumulative pension insurance system according to the terms and conditions established by RA legislation, but not more than 5% of the taxpayer’s gross income

• Contributions made by the state for the taxpayer within the obligatory accumulative pension insurance system in accordance with the terms and conditions established by RA legislation

• Compensation paid within the norms specified in the legisla- tion of the RA, with the exception of compensation paid for unused leave days in the event of quitting work

• Property and cash received from individuals as inheritance or gifts

• Amount of monetary and in-kind assistance provided to indi- viduals within the scope of charter activities of noncommercial organizations established in accordance with the procedures specified by the law of the RA and registered with the tax authorities

• Amount of financial assistance provided on the basis of deci- sions of the state administration and local government bodies of the RA, as well as financial assistance provided by foreign states and international (intergovernmental) organizations

• Grants received under procedures established by the law of the RA

• Proceeds from the sale of property to nonentrepreneur individu- als, with the exception of amounts received from the sale of property within the scope of entrepreneurial activity

• Scholarships and stipends paid by the state to students and postgraduates of higher educational institutions, students of specialized-secondary and vocational schools and attendees of religious seminaries

• Insurance compensation with the exception of insurance com- pensation received under the voluntary accumulative pension insurance system

• Income derived from the sale of shares, treasury bonds and other state securities

• Amounts received as compensation for damages under the law, with the exception of compensation for lost income

• Lump-sum amounts paid on the death of an employee or his or her family members

• Prizes won at international competitions and contests by ath- letes and coaches participating for the national team of the RA, and state awards (prizes)

• Monetary and in-kind winnings of the participants in lotteries implemented according to the procedures and terms specified by the law of the RA

• Insurance payments up to AMD 10,000 per month per head made by the employers for health insurance of their employees

• Income derived from the sale of agricultural production, as well as income received from other activities by individuals involved in agricultural production, to the extent that the income from such other activities does not exceed 10% of the income received



from agricultural and other activities (if the 10% threshold is exceeded, the entire income from the other activities is taxed)

• State benefits paid under the legislation of the RA, with the exception of benefits for temporary work disability

• All types of pensions paid under the law of the RA with the exception of pensions received under the voluntary accumula- tive pension insurance system

• One-time compensation paid under the law of the RA to fami- lies of deceased or disabled servicemen

• Alimony paid according to the law of the RA

• Amounts received by individuals for donated blood, breast milk and other types of donorship

• Income received from securities that certify taxpayers’ partici- pations in investment funds

• Income from the sale of handmade carpets for taxpayers engaged in the production of such carpets

Taxation of employer-provided stock options. Employer-provided

stock options are taxable benefits.

Capital gains and losses. Capital gains are subject to regular income tax when they are realized. Unrealized capital gains are not subject to tax.

Individual entrepreneurs may offset their capital losses against capital gains. If the capital loss cannot be offset in the year in which it is incurred, it can be carried forward to offset gross income in the following five years.


Business deductions. Taxpayers may deduct all necessary and documented expenses incurred directly and exclusively for the purpose of generating taxable income (for example, material expenses, depreciation allowances, lease payments, salaries and wages and interest paid), except for nondeductible or partially nondeductible expenses.

Nondeductible or partially nondeductible expenses include the following:

• Environmental pollution charges exceeding 0.5% of the gross income of the tax year

• Advertising, staff training, marketing and business trip expenses incurred abroad that exceed the norms established by the gov- ernment of the RA

• Representative expenses exceeding 0.5% of gross income (but not more than AMD 5 million) for the tax year

• Fines, penalties and other proprietary sanctions transferred to the state and municipal budgets

• Assets provided free of charge and remitted (forgiven) debts

• Expenses related to generation of income that is exempt from income tax

• Interest paid on loans and borrowings above the established limit of 24% per year

• Repair and maintenance expenses with respect to fixed assets in excess of 10% of the acquisition cost of the corresponding fixed asset

Depreciation allowances for fixed and intangible assets used in economic activities are deductible for tax purposes in accordance with the terms and conditions provided by the Law of the RA on



“Profit Tax.” The annual value of depreciation allowances is cal- culated by dividing the acquisition cost or revalued cost (if the

revaluation is carried out according to the procedure established

by the law of the RA) of fixed assets by the depreciation period

determined for the appropriate group of fixed assets or for intan- gible assets. The following minimum periods are established for depreciation purposes.

Minimum depreciation



period (years)

1 Buildings and constructions of hotels, boarding houses, rest homes, sanitariums and educational institutions


2 Other buildings, constructions and transmission devices


3 Robot equipment and assembly lines


4 Calculating devices and computers


5 Other fixed assets, including growing cattle, perennial plants, and investments intended for improving the land


The minimum depreciation period for fixed assets with a value

up to AMD 50,000 is one year.

Intangible assets are depreciated over their useful economic lives.

If it is impossible to determine the useful life of an intangible

asset, the minimum depreciation period of such asset is set at 10 years, but it may not be longer than the period of the taxpayer’s