In what cases is the income tax base recalculated in accordance with RA Tax Code?

Part 3 of Article 152 (on “Manner of Calculating and Withholding Income Tax by the Tax Agent”) of RA Tax Code defines (it is quoted): “In the cases defined by RA legislation in accordance with the established procedure of recalculation of income tax base, tax agents shall perform income tax calculation and recalculation”.

In compliance with this provision RA government has adopted a decision “On the Establishment of Revenue Tax Base Recalculation” ( N414, 20.04.2017, hereinafter referred to as Decision).
Thus, according to the Decision, the recalculation of the income tax base is carried out:

  1. In the event of labor contract termination on the basis of RA labor Code (hereinafter referred to as LC) as well as on the bases of other cases determined by the law, for levying the vacation day sums paid to employees for non-working days.

In other words, it refers to the cases when the employee is provided with more vacation days than he has. Afterwards the employee is dismissed until the end of the working year for when he has been granted the leave. According to the RA LC, in the presented case the sum of non-working days is charged. Nevertheless this point is not applicable for all the cases of labor contract termination. Particularly, RA Labor Code Article 213 point 2 stipulates that charges for non-working days shall be paid in case the employee has been dismissed in the cases presented in RA LC Article 1 point 6, 7, 12, 13, part 1 of article 112, or point 5, 6, 8-10 of Article 113, part 1.

2. In case of pregnancy and maternity leave interruption or in case of resuming the work of a self-employed person for the purpose of postponing the overpaid amount of maternity benefit provided by the Law of the Republic of Armenia “On temporary Disability and Maternity Benefits” (hereinafter referred to as Law).

Particularly, according to paragraph 5 of Article 27 of the Law (it is quoted): “In case of a hired worker’s pregnancy and maternity leave or resumption of a self-employed person’s employment, the maternity allowance is recalculated and the repatriation of the paid maternity benefit is made in accordance with the procedure established by the Government of the Republic of Armenia, except for the cases when the employer’s maternity benefit has been calculated on the basis of fifty percent of minimal monthly salary, in case the maternity allowance of the hired employee or a self-employed individual average wage or income to be calculated is less than fifty per cent of the minimum monthly wage (Article 22, part 6).

The Decision will be effective since January 1, 2018.