The Armenian government has approved the ratification of a new tax agreement with Hong Kong, signed in Yerevan on June 24, 2024.
The agreement establishes clear rules for taxing dividends, interest, and royalties between the two jurisdictions without imposing additional burdens on the state budget.
This decision comes in the context of a broader challenge: the misuse of international tax agreements for tax avoidance purposes.
According to a study by Armenia's tax authorities, between 2019 and 2021, non-residents received income totaling approximately $1.56 billion, which was taxed at minimal rates or not taxed at all.
Of particular concern to authorities are existing agreements with the UAE, Luxembourg, and Cyprus, which are estimated to cost the country $127–152 million in lost tax revenue annually.
While such agreements are primarily intended to prevent double taxation and create a stable environment for businesses, they often lead to "double non-taxation," where income goes untaxed in either country.
Armenia currently has tax agreements with approximately 50 countries worldwide, and the new treaty with Hong Kong further expands this network.
