Prime Minister Nikol Pashinyan wrote a post on his Facebook page on February 4, referring to an incident in one of the restaurants in Artsakh when he demanded a cash register receipt, but the staff were unable to provide it, after which he called the Artsakh tax authorities demanding to fine the restaurant.
“By the way, although public catering facilities pay a fixed tax in the Republic of Artsakh, the issuance of a cash register receipt is mandatory for every transaction because a tax recalculation takes place after a certain threshold in turnover. And the turnover threshold is controlled by cash register receipts” Pashinyan wrote, adding that after the incident the restaurant owner made a noise that the Prime Minister had sent the tax authorities after him.
It turns out Pashinyan and his family visited Ari Resort restaurant on February 2, located in the Sotk-Karvachar section of Yerevan-Stepanakert highway. The owner of the restaurant is Arshak Zakaryan, the author of the film series “In the Outposts”. The latter talked about the incident for about 27 minutes on his Facebook page on February 3, noting that they pay a fixed fee, which makes it senseless to print the cash register receipt. The latter noted that the circumstance of not printing a cash register receipt does not affect his tax liabilities in any way, as he is a fixed taxpayer.
However, the legislation of Artsakh is misrepresented in this statement.
What does the NKR Law on Fixed Payments stipulate?
In the Republic of Artsakh, public catering activities are subject to a fixed rate taxation regime.
Chapter 4 of the NKR Law on Fixed Payments sets out the mechanism for fixed payments for public catering activities, in particular, who may be mandatory fixed taxpayers, and in which case the fixed payment procedure is not applied.
Article 33 states that those are not considered fixed taxpayers in public catering industry whose turnover exceeds 200,000 AMD (the threshold) per 1 square meter of service area during a quarter (regardless of the number of days of activity).
That is to say, if we assume that the entity has a 10 square meter commercial area, the fixed payment for the quarter will be charged in case of up to 2 million worth turnover, otherwise a recalculation will be done for that quarter and the tax will be paid not based on fixed but on value added tax and income or profit tax.
As for the size of the fixed payments, different coefficients are used to calculate and determine the amount of payments depending on the size of the service area, whether it is closed or open space, its location (Articles 34, 35 and 36 of the law).
It is mandatory to provide a cash register receipt in Artsakh as well
Armine Musaelyan, Head of Tax Administration Methodology and Taxpayer Information Department at the Ministry of Finance of the Republic of Artsakh, told Fip.am that even if a fixed payment is paid, it is mandatory to print a cash register receipt. “Because the income tax depends on the incomes it reflects. Individual entrepreneurs pay an annual income tax, which is at least 5.000 AMD per month, but on an annual basis income is calculated, minus expenses, and 10% tax on net income is calculated. Now if he hides his income, it is clear that the tax will remain at least 60,000 AMD, and if he shows real income, he may pay more than the aforementioned 60,000 AMD. Suppose the total income is 2 million AMD, the expenditure is 1 million AMD, 10 percent of that 1 million net income will be 100,000, but it will turn out that he is paying only 60,000” she said.
Thus, we can state that Ari Resort restaurant owner Arshak Zakaryan’s assertion that the tax paid is the same regardless of the volume of turnover does not correspond to the reality, since the fixed payment is no longer applicable after a certain threshold is crossed. And the indicators of turnover volumes are the printed cash register receipts.