VI. TRADE REGULATIONS AND STANDARDS Tariffs And Import Taxes CUSTOMS TARIFFS: All exports from Armenia are duty free. Import tariffs are levied on a very limited scope of goods and largely vary from 5 to 10 percent. No duties are levied on: - imports from the states with which Armenia has established free trade zones or customs unions. - goods imported temporarily under customs control and under an appropriate customs regime. - imports for construction projects envisaged by inter-government agreements on investment cooperation. - imports made on credits to the government, the state budget, and government funds. There is no limit on hard currency imports to Armenia. Persons who leave the country are permitted to export a sum that exceeds 500 USD (or an equivalent sum in an other hard currency) only upon presentation of a document proving that the money was legally obtained. A certificate of origin may be requested by customs for imported or exported goods. The certificate of origin must be provided for imported goods when: - imports are made from countries for which Armenia has set quotas or other foreign trade regulation measures. - it is stipulated by international agreements joined by Armenia, or by Armenian legislation related to preservation of the environment and health, and protection of Armenian consumers' interests, public order, and national security. The customs processing fee for export/import transfer is 0.15 percent of the estimated cost of goods. No fee is collected for deliveries made on credits to the Armenian government, countertrade clearing operations made on the basis of international agreements, or for humanitarian aid. All Armenian and foreign citizens when crossing the Armenian customs border can transfer in and out with them any quantity of items/personal belongings except for those for which the Armenian government has defined quantity limitations. At the same time, the total cost of these controlled items must not exceed USD 1,000. If the stated quantity of the items, or the total cost of USD 1,000 is exceeded, the items are considered "goods for sale" and are subject to tariffs varying from 10 to 20 percent of the item's cost in most cases. VALUE-ADDED TAX (VAT): According to current regulation the VAT is a tax levied on a turnover from production and circulation of products, finished works, and services (including imported ones). The VAT is deposited to the state budget. At present the following VAT rates are in force (percent of the taxed turnover): for industrial-technical products (works, services), sold at free-market prices and tariffs, as well as state-fixed wholesale prices and tariffs...................20 Percent for consumer products, and services sold on state-fixed prices and tariffs that include the vat...................16.67 Percent The same rate of 16.67 percent is applicable to resale (retail of consumer goods, catering, intermediation, brokerage, etc.), and delivery of services, the cost of which includes the 20 percent vat. Comment: Until the adoption of a special regulation on VAT calculation for imported products, organizations that import products from non-CIS countries (including the U.S.A.) for sale in Armenia must calculate the VAT as 20 percent of the product's wholesale price (or 16.67 Percent of retail price) As of December 15, 1993, the VAT on imports and distribution of butter, vegetable oil, sugar, margarine, cereals, cheese, and milk powder has been lifted in order to establish more favorable conditions for their entry into the republic. EXCISE TAX: According to the ROA law "On Excise Tax" of June 6, 1992, the excise tax is an indirect tax which is included in the price of a product. Excise tax is paid from the proceeds received from the sale of the products which are subject to excise tax. Products which are exported from the territory of CIS countries are not subject to excise tax. Currently, enterprises, organizations and citizens who import the following products from non-CIS states must pay the relevant excise taxes (percent of wholesale price of goods): _____________________________________________________ product tax rate ----------------------------------------------------- 1. Wine-vodka products (alcohol, vodka, liquor, cognac, wines, champagne wines) 10 2. Tobacco products 10 3. Tires for automobiles 5 4. Fur and fur products 10 5. High quality china and crystal - products 10 6. Carpets and carpet-woven goods 5 7. Clothing made from natural leather 10 Enterprises, organizations, and citizens who produce or import wine-vodka products must pay excise taxes within three days following the sale of products. Excise tax on all of the other listed products is paid as follows: one payment is made for the first 20 days of the month (payment must be made on the 3rd working day following the end of this period) and another payment for the last 10 days of the month (payment must be made on the third working day of the following month). Excise tax payments are transferred to the state budget. Customs Valuation The value of imports is declared by the exporter. The value declared should be based on reliable, countable, documented sources. In the absence of these, the customs may use its own or comparable information sources and valuations methods based on GATT regulations: Valuation methods can be based on the following: - value of the particular contract - value of the contract for similar imports - value of the contract for uniform imports - deduction from the cost - addition to the cost - reserve method Import Licenses Licenses for the import of certain goods and services are issued by the Armenian government. A license issued to a particular entrepreneur or business cannot be transferred to another legal entity or person. The fee for getting a license is equal to the minimum official monthly salary in the republic and is paid to the state. A license is issued on the basis of the following: A. A state order, an export quota, or an agreement between an Armenian producer and an exporting organization. B. In case of export/import of certain specific products - the authorization of appropriate ministries, state departments and administrations. Licenses are of two types - general and one-time. A separate license must be provided for each particular type of a product stated in a contract. The following documents are needed when applying for a license: a. Application b. Documented proof of product's origin: - an agreement or a substitute document on the obtaining of the product (this could be an agreement with the manufacturer, an agreement with the wholesaler, importing documents in case the product originates outside of Armenia). - Financial document on the obtainment of the product. - Certificate of origin - certificate of quality c. The export or import agreement, including documents certifying that both parties are registered. Licenses are given for the time needed to conduct the export/import operation but for no more than one year. The validity of licenses can be extended. Under certain conditions issuance of a license can be denied or cancelled. Licenses are issued ten days after an appropriate application is filed (if exporting diamonds it must be issued in three days). In the event the issuance of a license is groundlessly denied, or its operation is groundlessly cancelled, the applicant or the license holder may appeal the decision. The following organizations are responsible for issuance of import licenses: a. Ministry of Economy (export from Armenia): - non-ferrous metal ores and products. - Precious metal materials, ores, products made from them, scrap. - Rare metals and their compounds. - Natural and artificial, precious and semi-precious stones and products made from them. - Textiles and textile goods. b. Ministry of Economy with approval by other ministries or state agencies (export from Armenia): - wild animals and plants which are registered as endangered species (the Ministry of Nature and Environmental Protection). - Medicines and substances for their production (the Ministry of Health). c. Ministry of Health (import): - medicines d. Ministry of Agriculture (import): - fertilizers e. The Armenian Government (export): - munitions - military equipment - explosives - nuclear materials, technology and equipment - specific non-nuclear materials and related services - sources of ionized radiation - narcotics and psychotropic substances f. "Metallurgimodecs" state enterprise (export) - copper and molybdenum materials and ores The Armenian Customs Department controls the export prices for the following products: - electric cables - non-ferrous metals - lamps - products from ferrous metals - scrap and waste of ferrous metals - synthetic rubber and latex - vinegar acid and vinegar anhydride - polyvinilacetate dispersion - essential oil and other synthetic odorant substances - calcium carbide - bentonite - acetate fiber - pelts - leather - cement - cognac - granite, marble, and marble type conglomerates Joint ventures and foreign-owned companies exporting their own products from Armenia do not need an export license regardless of the type of product. Export Controls BARTER PROHIBITION According to a GOA decision of October 13, 1993, exports on a barter basis of a large assortment of products and raw materials are prohibited except when specifically by the Government or made in compliance with international governmental agreements. Also exempt are exports of products manufactured from raw materials provided by the importer. A state or a private organization, in order to apply to the Government (office of the Prime Minister) for permission to conduct barter exports, should first receive approval from the Ministry of Economy. List of products prohibited for export on a barter basis: - nonferrous metals, and mineral stones - products and sub-products made from nonferrous metals, their alloys, and mineral stones, - rare metals, their alloys, and products made from them - synthectic corundum - natural and artificial precious gems and products made from them - cement - cables, electric wires - synthetic rubber and latex - acetic acid and acetic anhydride - polyvinyl acetate - caustic sodium - essential oil and other synthetic perfumes - calcium carbide - bentonite - acetate fiber, filters - leather - crystal products - copper - polyethylene bags - electric motors - pumps - relays - lamps - alarm clocks - automobiles assembled in Armenia - automobile parts - automobile tires - electric transformers - carbinol - diamond tools - brandy, vodka, wine - tomato paste - carpets - perlites, tufa, granites, marble, and marble-type conglomerate stones - tobacco - chewing gum - socks, tights - shoes made of natural leather The following is a list of products, export of which by non-state organizations must be paid in advance or by letter of credit: - nonferrous metals - rare metals and their alloys - natural and artificial gems and products made from them - cables and wires - synthetic rubber and latex - polyvinyl acetate dispersion - bentonite - acetate fiber, filters - diamond tools - brandy, vine, vodka - tomato paste - carpets MUNITIONS AND DUAL-USE EXPORT CONTROL: Export of the following products must be licensed: - munitions - military equipment - explosives - nuclear materials, technology and equipment - specific non-nuclear materials and related services - sources of ionized radiation A special governmental commission chaired by the Deputy Prime Minister, and an affiliated council of experts has been created to process export applications for these categories. Exporters are required to provide full technical specifications and supporting documentation with every license application before it is processed. Munitions and dual-use items can be exported only to prescribed destinations. On September 27, 1993, the GOA adopted an itemized export control list titled "List of Materials, Substances, Equipment, and Dual-Use Technologies Export of Which Must Be Licensed". The list is accessible to government or non-government exporters together with the details of the procedures to be followed to obtain a license. The export control list includes four main divisions of materials, substances, devices and dual-use technologies which may be used in development of the following weapons: a. Bacteriological and poisonous weapons B. Nuclear devices C. Rocket weapons d. Chemical weapons According to Armenian licensing and customs officials, no cases of exports of proliferation-related materials, goods, technologies and services have been registered in Armenia since June 1993. The following items cannot be shipped through Armenia: - All types of weapons, ammunition, army equipment, components for their production, and explosives. - Nuclear materials (including those in the form of heat producing materials), and sources of ionized radiation. Transit of listed items via Armenia is to be made on special permission of the Armenian government. Armenian customs is responsible for verifying the contents of transit loads when transit of prohibited items is suspected. Customs has the legal power to inspect and arrest suspected transit shipments. Dual-use items require an import certificate from the country of destination to guarantee that the imported items will not be used for military purposes. All illegal exports of items listed in the export control list are to be viewed as illegal export of weaponry for which the acting criminal law envisages penalty from 3 to 8 years of imprisonment. Import/Export Documentation All economic entities, regardless of the form of ownership, when conducting export operations must provide an invoice in four copies, which is registered with the Customs Department or, if advance payment or a letter of credit is used for payment, approved by the bank servicing the payment. One copy of the invoice is kept by the Exporter. The second is retained by the Customs Department, which in its turn sends the two remaining copies to the servicing bank and the State Tax Inspectorate. Temporary Entry Foreigners who temporarily enter Armenia can bring one vehicle with its trailer duty free on the condition that it must be taken with them when they leave. If the foreigner does not re-export the car, duties calculated for each 1 cubic cm of the car engine's working volume as follows must be paid: age (years) duty - USD 0-2 0.1 2-4 0.15 4-6 0.25 6-10 0.30 More then 10 0.40 Labelling, Marking Requirements New labelling requirements have yet to be adopted by the Armenian government. Soviet regulations remain in force. Prohibited Imports List of items prohibited for import: - weapons, explosives, army equipment, components for their production, and army uniforms. - Narcotics, psychotropic substances, devices intended for their use. Note: import of the listed items is implemented in compliance with special government regulations. Standards Armenia uses the metric system of weights and measures Free-Trade Zones/Warehouses The present situation makes it difficult to establish free-trade zones, which earlier were popular subject for speculation in the government circles. There are currently no free trade zones in Armenia. Special Import Provisions As of December 15, 1993, the VAT on the import and distribution of butter, vegetable oil, sugar, margarine, cereals, cheese, and milk powder has been suspended in order to establish more favorable conditions for their entry into the republic. Membership In Free Trade Arrangements None