1. Eurasian Economic Union Changes in tax legislation of the Republic of Armenia 4 March 2015

2. Legislation base

3. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 2 Application of the Union’s legislative acts The legal framework constituents of the Union, i.e. officially published agreements and decisions of the Union’s bodies are effective directly in the Republic of Armenia, unless they contain requirements for the adoption of national laws for application purposes. Transportation of goods through the customs border of the Union is regulated in accordance with the customs legislation of the Union, and their part not regulated is regulated in compliance with the legislation of the Republic of Armenia. Transportation of goods through the border of the Republic of Armenia is regulated in accordance with the RA Law on Customs Regulation, international agreements signed by the Republic of Armenia, laws and legislative acts of the Republic of Armenia.

4. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 3 LEGAL FRAMEWORK EURASIAN ECONOMIC UNION (EAEU) AGREEMENT ON EURASIAN ECONOMIC UNION (29.05.2014) EAEU CUSTOMS CODE LAW ON CUSTOMS REGULATION EAEULOCAL AGREEMENTS LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES BETWEEN THE REPUBLIC OF ARMENIA AND MEMBER STATES OF EAEU International Agreements LAW ON VALUE ADDED TAX LAW ON EXCISE TAX RA GOVERNMENT DECREES 33 APPENDIXES Appendix 18 PROTOCOL on procedure on collection of indirect taxes and control mechanism over their payment during export and import of goods, performance of works and provision of services ON COMMON RULES FOR DETERMINING THE COUNTRY OF ORIGIN OF GOODS ON DETERMINING CUSTOMS VALUE OF GOODS CROSSING CUSTOMS BORDER OF THE CUSTOMS UNION (25.01.2008) ON TRANSPORTATION OF GOODS FOR PERSONAL USE BY INDIVIDUALS ACROSS THE CUSTOMS BORDER OF THE CUSTOMS UNION AND CUSTOMS OPERATIONS CONNECTED WITH THEIR RELEASE DECISIONS OF UNION’S BODIES AGREEMENT ON JOINING OF THE REPUBLIC OF ARMENIA THE AGREEMENT ON EAEU 5 APPENDIXES Appendix 4 List of goods and rates for which rates different from import customs tariffs of EAEU are applicable by the Republic of Armenia in the transition period

5. RA LAW ON CUSTOMS REGULATION

6. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 5 RA LAW ON CUSTOMS REGULATION (1/4) The Law entered into force from 2 January 2015. The Customs Code of the Republic of Armenia was declared void except for provisions related to duty-free shops, customs warehouses and customs mediators which expire after 18 months. Commodity Nomenclature of Foreign Economic Activity (“CNFEA”) approved by the Commission of the Union shall be applied for the of application of tariff and non-tariff regulation measures. The customs value of the goods exported through the RA border is the transaction price, which is the amount actually paid and subject to payment or that should be paid for the purchase of goods to export to the country of importation and their transportation to the border of the Republic of Armenia. Customs value of the goods imported through the customs border of the Union is determined in accordance with the Agreement on determination of customs value of the goods transported through the customs border of the Customs Union dated 25 January 2008

7. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 6 RA LAW ON CUSTOMS REGULATION (2/4) Export from the Republic of Armenia Customs duty rate for the goods is 0%. The law may prescribe other rates of customs duty for the goods exported from the Republic of Armenia. No customs duties are levied. Double fulfillment of customs formalities is not required. No fulfillment of customs formalities for goods registered in the EAEU member states by the customs procedure on “release for domestic consumption”. For imported goods (except for the goods imported by air transportation means) customs formalities are fulfilled according to the "Customs transit" customs procedure. Import from the EAEU member states

8. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 7 RA LAW ON CUSTOMS REGULATION (3/4) Customs duties are calculated based on common customs tariff rates of the Union. Exception: different customs duties established for the goods imported to the Republic of Armenia within the timeframes specified by appendix 4 of Agreement on Joining of the Republic of Armenia to the Treaty on Eurasian Economic Union. Customs duty for import is paid to the joint account of the Union and can not be offset against other payments. Customs duties payable for import of goods for personal use by individuals are paid to the state budget of the Republic of Armenia. The amounts of customs duty for import of foreign goods paid in excess shall be offset only against liabilities on import customs duty. Import from non-EAEU member states

9. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 8 RA LAW ON CUSTOMS REGULATION (4/4) Postpone of the date for payment or payment in installments of customs duties for certain goods The list of goods is established by the Government of the Republic of Armenia. Can be provided only on the availability of customs security tools (collateral, guarantee, etc.) specified by chapter 12 of the Customs Code of the Union. Interests in the amount of settlement rate of bank interest set by the Central Bank of Armenia for the customs duty is payable (recalculated on a daily basis).

10. RA LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES

11. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 10 LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES (1/4) Taxation bases for VAT and excise taxes are determined as at the date the goods cross the RA state border. Taxation base includes purchase price, transportation and insurance costs and other expenses (methodology of article 87 of the former Customs Code). Import of goods from the EAEU member states VAT taxation base for tobacco production is determined in accordance with the procedure specified by clause 11 of article 8 of the RA Law on VAT.

12. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 11 LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES (2/4) VAT and excise tax amounts calculated for imported goods are paid by the 20th (inclusive) of the month following the month of actual import of goods:  For VAT and excise tax amounts not subject to mandatory excise stamping as amounts payable to the tax authorities  for goods subject to mandatory excise stamping as amounts payable to the customs authorities Documents to be submitted to tax authorities In case of import of goods, the taxpayer is obliged to submit only the below stated documents to the tax authorities by the 20th of the month following the month of import of goods. import tax declaration completed by the importer; Declaration-announcement completed by the importer for import of goods and payment of indirect taxes (or about exemption from indirect taxes, payment of indirect taxes per other procedure).

13. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 12 LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES (3/4) Taxation base for VAT (taxable turnover) is the customs value calculated in accordance with the RA Law on Customs Regulation. export tax declaration completed by the exporter; Taxation base for excise tax is the customs value and (or) in-kind units of measurement established by the RA Law on Excise Tax. Taxation bases denominated in foreign currency recalculated to AMD at the exchange rate at the date of crossing the RA state border. Export of goods from the Republic of Armenia to the EAEU member states Documents to be submitted to tax authorities For substantiation of application of zero rate of VAT for the exported goods and (or) their exemption from excise tax, the exporter shall submit only the below stated documents to the tax authorities within 180 days following the export: Declaration-announcement completed by the importer for export of goods and payment of indirect taxes (or exemption from indirect taxes, payment of indirect taxes per other procedure) and approved by tax authorities. Application of zero rate of VAT and (or) exemption from excise tax are considered to be accepted by the tax authorities at the date the above stated documents are simultaneously submitted to the tax authorities. The application may not be submitted in case the tax authorities possess the confirmation y tax authorities of import country in electronic form

14. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 13 LAW ON PECULIARITIES OF CALCULATION AND PAYMENT OF INDIRECT TAXES (4/4) Responsibility for infringement of the law For not submitting the documents within 180 days:  20% VAT is calculated on the customs value,  excise tax is calculated per the rates established for disposal of the given goods in the Republic of Armenia For not paying the taxes: fines are calculated in accordance with the procedure stipulated by the law. If submitted after 180 days, a recalculation of the imposed liabilities (except for fines) is made. The liability is considered invalid, or in case of being paid, is treated as an overpayment resulting from the payment. No adjusted VAT report is submitted.

15. RA LAW ON VALUE ADDED TAX

16. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 15 LAW ON VALUE ADDED TAX Taxation base for the exported goods is determined based on the customs value calculated in accordance with the procedure specified by the RA Law on Customs Regulation. VAT taxation base for the goods imported from the EAEU member states is determined in accordance with the procedure specified by the RA Law on Peculiarities of Calculation and Payment of Indirect Taxes. For goods imported from the EAEU member states, VAT is calculated and paid to the tax authorities. Offsetting of input VAT on import Import VAT can be offset in the amount of VAT paid and reflected in VAT calculations submitted for the reporting period of their payment (cash basis). Services Principles of article 14 of the RA Law on VAT shall apply for determination of place of performance of works and provision of services, except for the rules for determination of place of provision of transportation services.

17. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 16 IMPORT BY INDIVIDUALS (1/2) Import by individuals – customs duties customs payments (except for customs fees) for the goods imported to the territory of the Republic of Armenia by international mail or courier deliveries are paid per the following common rates: Customs payment rate For goods imported within one month Weight Customs value 0% up to 30kg up to AMD 200 thousand 22.5% up to 30kg AMD 200 thousand – up to EUR 1000 30% more than 30kg more than EUR 1000 Individuals arriving to the RA for permanent residence, including forced displaced persons or refugees, may import their property for personal use free of customs payments (except for customs fee).

18. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. 17 IMPORT BY INDIVIDUALS (2/2) Individuals not being sole entrepreneurs are liable to pay VAT, in cases of:  import carried for entrepreneurial activities in accordance with RA Law on Customs Regulation, or  Imported cars (applicable by 01.01.2017 for cars imported from the EAEU member states.) Import tax declaration completed by the importer shall be submitted to the tax authorities for the cars imported from the EAEU member states by the individuals not being sole entrepreneurs. Import by individuals - VAT

19. © 2015 KPMG Armenia cjsc, a company incorporated under the Laws of the Republic of Armenia, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and ‘cutting through complexity’ are registered trademarks or trademarks of KPMG International Cooperative (KPMG International). Kristina Dudukchyan Manager, Tax Telephone: + 374 10 56-67-62 E-mail: kdudukchyan@kpmg.com Shoghik Gharibyan Manager, Tax + 374 10 56-67-62 sgharibyan@kpmg.com