*Tax treaty–Armenia’s accession into World Trade Organization among topics of discussion when bilateral group meets in Yerevan on January 23-24 to help expand US-Armenia economic relations.
WASHINGTON–The Armenian National Committee of America Monday welcomed the upcoming semi-annual meeting of the US-Armenia Task Force–to be held in Yerevan–Armenia on January 23 and 24–as an important step in expanding US-Armenia commercial activity and further strengthening Armenia’s growing economy.
Ambassador Bill Taylor–coordinator of US assistance to Europe and Eurasia–will lead the US delegation–which will include officials from the Departmen’s of Commerce and Treasury–Justice–and Agriculture–as well as from the office of the US Trade Representative and the US Agency for International Development. Leading the Armenia delegation will be Finance and Economy Minster Vardan Khachatryan.
Among the topics of discussion during the two day meeting will be the adoption of a treaty on bilateral taxation – or "double taxation" – of companies and individuals living and working in both countries. The adoption of such a treaty would clarify the taxation of transactions–investmen’s–rents–royalties–management contracts–dividends–interest and salaries. (Details on the bilateral taxation issue and a related social security agreement are outlined below.)
Other topics on the Task Force agenda include promoting economic and financial sector reforms; fighting corruption; Armenia’s accession to the World Trade Organization; expanding tourism in Armenia; increasing Armenian imports to the United States; cooperation in fighting international terrorist financing; maximizing the effectiveness of the US assistance program–and; domestic and regional energy generation and distribution.
"We appreciate the farsighted efforts of the Task Force and–in particular–the leadership of Ambassador Taylor in facilitating the expansion of our economic relationship with Armenia," said ANCA Executive Director Aram Hamparian–who consulted with Ambassador. Taylor and his staff last week at the State Department. "We are confident that the Task Force will make progress on the many important bilateral issues on its agenda–and are hopeful that its members will have the opportunity to explore innovative ways–among them a bilateral taxation treaty and social security agreement–to build upon the enduring friendship–shared values–and growing economic ties between the United States and Armenia."
The US Armenia Task Force was formed in January of 2000 to help coordinate the efforts of the Departmen’s of State–Commerce and Treasury–the Trade Development Agency–the US Agency for International Development–and the National Security Council to promote economic cooperation between the US and Armenia and to assist Armenia in its transition to a market-oriented economy. The Task Force is scheduled to meet twice a year–and alternates venues between Yerevan and Washington.
For more information about Armenia’s economy and US-Armenia economic activity–visit the Armenia page on the website of the US Department Commerce: http://www.bisnis.doc.gov/bisnis/country/armenia.cfm
Background Information on the US-Armenia Bilateral Tax Treaty and Social Security Agreement
The lack of a clear–predictable and stable tax regime prevents Americans from becoming more actively involved in the Armenia’s market-oriented economic development. This is particularly true for the many Americans of Armenian heritage who would like to live–work–or retire to Armenia on a part-time or part-year basis.
*A bilateral tax treaty (Treaty for the Avoidance of Double Taxation of Income) would clarify taxation of transactions–investmen’s–rents–royalties–management contracts–dividends–interest–and salaries for companies and individuals who reside or operate in both countries.
*The adoption of a Social Security Agreement would clarify Social Security obligations and entitlemen’s for companies and individuals working or residing in both countries. It would eliminate dual Social Security coverage and taxes for multinational companies and expatriate workers–while improving benefit protection for workers who have divided their careers between the United States and Armenia.
*The United States and Armenia have already adopted a number of investment and trade-related treaties–including the Investment Incentive Agreement and the Trade Relations Agreement.
*The United States has established Social Security arrangemen’s with nineteen other nations–including Greece–Ireland–Italy–Chile–Portugal–South Korea–France–Switzerland–and the United Kingdom.
*Armenia’s economy has shown substantial growth (8 percent in 2002 according to the IMF and World Bank statistics).
*The lead US body for the discussion of bilateral US-Armenia economic issues is the US-Armenia Economic Task Force. The issue of the Bilateral Tax Treaty is expected to be on their agenda when they hold their semi-annual meeting in Yerevan on January 23 and 24. The Task Force was launched in January of 2000 to coordinate the efforts of the Departmen’s of State–Commerce and Treasury–the Trade Development Agency–the US Agency for International Development–and the National Security Council–to promote economic cooperation between the United States and Armenia.
The establishment of clear-cut rules on tax liabilities and social security arrangemen’s will increase American involvement in Armenia’s economy–advancing broader US policy in support of a secure–prosperous–and democratic Armenia with strong economic ties to the United States and the international community.
1. Bilateral Tax Treaty
Adoption of a bilateral US-Armenia tax treaty will help both the United States and Armenia by:
* Reducing the risk of double taxation;
* Clarifying requiremen’s to improve compliance with tax laws and obligations;
* Improving the stability of the tax treatment of commercial activities–by setting rates and scope of application of each country’s tax codes;
* Facilitating part-time–part-year–inter-country economic activities and employment. (These are exactly the types of activities that have the greatest benefit to both countries and have the largest growth potential.)
2. Social Security Treaty
Adoption of a US-Armenia Social Security Agreement will help both the United States and Armenia by:
* Clarifying social security payment obligations of individuals and companies for their US employees in Armenia and vice versa;
* Permitting credit or offset of paymen’s in one country against paymen’s made in the other;
* Clarifying when employees and employers need to make contributions in each country;
* Clarifying where benefits may be received and how they are taxed in each country;
* Providing portability – so that survivor and dependents can continue to collect the benefits to which they are entitled;
The United States government–through the US-Armenia Task Force and its relevant departmen’s–can further strengthen US-Armenia relations by acting in a timely manner to negotiate and finalize a Bilateral Tax Treaty and Social Security Agreement with Armenia.