Transfer Pricing in Armenia

The legal framework

Start with what Armenia is not. There is no OECD transfer pricing country profile for Armenia, and there never has been. The series reached 83 jurisdictions after the third batch of October 2025; Georgia, Azerbaijan, Ukraine and Türkiye are in it, Armenia is not. Anyone benchmarking Armenia off an OECD scaffold is working from a document that does not exist. The only OECD instrument covering Armenia is the Dispute Resolution Profile of 29 February 2024, which speaks to MAP and nothing else.

Armenian transfer pricing is therefore a domestic-law subject. The rules sit in Chapter 73 of the Tax Code (Law HO-165-N of 4 October 2016), Articles 360 to 378, deferred by Article 444(11.1) so that they applied only from 1 January 2020. Law HO-86-N of 23 March 2022 rewrote almost the entire chapter, and the only change since is a cross-reference fix to Article 363(5) by HO-156-N of 29 May 2025. Two consequences follow for research discipline: any commentary written before mid-2022 is unsafe, and where the ARLIS English translation and the Armenian consolidated text differ, the Armenian governs.

Scope is narrower than practitioners expect. Article 360(2) confines the regime to profit tax and the natural resources royalty; VAT left the scope in 2022, though stale secondary sources still say otherwise. Article 360(3) carves out dealings with state bodies, the Central Bank, tariffs fixed by the Public Services Regulatory Commission, and bases governed by ratified treaties. Article 363 then makes a transaction controlled in four situations, including any dealing with a person in a jurisdiction taxing profits at 10% or less, whether or not the parties are related. Everything is gated behind a single aggregate test: AMD 200 million of controlled transactions in the year, net of VAT, excise and environmental tax. Below that, Chapter 73 does not bite at all.

One structural point drives strategy. The OECD Guidelines have no legal status in Armenia. Neither Chapter 73 nor Government Decision 556-N mentions them; the only OECD reference in the entire Code is to the Common Reporting Standard. The architecture is recognisably OECD-shaped, but the argument in an Armenian audit room must be built on articles, not paragraphs of the Guidelines.

Methods, comparables and benchmarking

Article 368(1) prescribes five methods and no others: CUP, resale price, cost plus, TNMM and profit split. Selection turns on four criteria, CUP wins any tie on reliability, and applying a second method is not required. The provision that matters commercially is Article 368(6): where the taxpayer has properly selected its method, the SRC must take that method as its starting point. A rigorous method-selection narrative is the most valuable page a taxpayer can write, because it fixes the auditor's frame before the numbers are argued.

The range is where Armenia departs sharply from habit. Article 371(1) defines the arm's length range as the full set of financial indicators produced by applying the chosen method to comparable uncontrolled transactions. There is no quartile concept anywhere in Chapter 73 or Decision 556-N. A study that presents only an interquartile range is not, on its face, applying Armenian law, and the mismatch is easy for an auditor to exploit. Where a single fully comparable transaction exists, Decision 556-N allows it to serve as both bounds of the range.

If the tested indicator falls outside the range, Article 374 permits adjustment to the median, which the English translation renders as "midpoint". Article 361(1)(15) removes any ambiguity: order the indicators ascending, take the middle value, or the mean of the two middle values on an even count. The SRC bears the burden of proving the accuracy of its adjustment; the burden shifts only if the taxpayer argues for some point other than the median.

On data, Article 367 prefers internal comparables where equally reliable, then admits an unusually wide external list including customs foreign-trade statistics, National Statistical Service data, exchange prices, and companies' own published accounts and transfer pricing policies. Article 367(5) permits foreign comparables where no resident data exists, which in a market of Armenia's size is the ordinary case rather than the exception, and Article 366(2)(3) contemplates geographic-market adjustments. Article 370 requires transaction-year data, allowing prior years only where current data is unavailable at assessment. Tested-party rules are conventional and a foreign tested party is expressly permitted.

Documentation: what the SRC expects

Two obligations must be kept apart. The notification of controlled transactions under Article 375 is a hard-calendar filing: due 20 April of the following year, on the form the SRC prescribes under Article 375(2), wherever the AMD 200 million threshold is crossed. Both parties file for domestic controlled transactions. The form comes from SRC Order 671-N of 11 October 2019, its Appendix 1 restated first by Order 1299-N of 12 December 2022 and then by Order 948-N of 22 July 2025, which takes effect on 1 January 2026 and applies to reporting periods falling after 1 January 2025. Work from the 948-N version. It asks for counterparty, residence, relatedness criterion, transaction type, method used and per-counterparty totals. Amendment is free until the day the SRC's documentation request lands, and that cut-off makes an early self-review worth the effort.

Documentation itself is request-driven. Armenia imposes no contemporaneous-documentation deadline tied to the return; the obligation crystallises only when the SRC writes, and 30 working days then run, with 10 working days for follow-up questions and 5 to arrange an interview. In substance the choice is illusory. Thirty working days is not enough to build a defensible local file from scratch, and the price of missing it is calculated on transaction value. Files should be built to the 20 April rhythm regardless of what the statute technically compels.

Content follows the familiar three tiers with Armenian names. The local document under Article 376(1.1)(1) needs business and functional description, comparability and FAR analysis, method and reasons, party list with residences, comparables sources, range calculation and tested-party financials. The principal document under Article 376(1.1)(2) is filed by the consolidating parent, with no separate monetary threshold. The CbC report applies to groups above EUR 750 million of prior-year revenue and is due within twelve months of year end, first for years beginning on or after 1 January 2025.

Two gaps deserve flagging. Chapter 73 contains no CbC notification obligation and no secondary filing, local filing or surrogate parent mechanism: the duty rests on the parent alone. And several delegated instruments could not be retrieved at all, including the SRC orders on local and master file content, the CbC form and the APA procedure. Confirm those directly with the SRC rather than assuming an OECD-standard template. Documentation may be filed in Armenian, English or Russian, in paper or electronic form, with an Armenian translation due within 10 working days if demanded; the transfer pricing calculation report, as a tax calculation report, goes electronically under Article 53(5) unless one of that provision's exceptions applies.

Audits, penalties and the enforcement climate

The 2022 law made transfer pricing inspection a distinct species of tax control under Article 335(2)(3), with its own subject matter, ring-fenced from complex tax inspections. It may run 90 consecutive working days, extendable by another 90 and capped at 180 working days of actual duration, against 15 for other inspections, and it sweeps in every period whose notification deadline has passed and which has not been inspected before. Frequency is risk-banded under Article 337(1)(2): no more than once in three years for high-risk taxpayers, four for medium, five for low, with the high-risk band capped at 20% of taxpayers. Selection under Article 336 is driven by the notification and by risks read out of the documentation, which makes the April filing a risk-rating exercise rather than an administrative chore. The draft act must attach the calculated range, the median and the comparability sources, and that attachment is the first thing to attack on appeal.

The penalty architecture is unusual and should reset any assumption imported from other jurisdictions. Missing the notification costs a fixed AMD 1, 3 or 5 million depending on prior-year revenue. Errors in it cost AMD 500,000 per error or omitted transaction. But the number that dominates planning is Article 402.2: failure to produce documentation on time attracts 10% of the value of each undocumented controlled transaction, plus 0.04% per day thereafter. The base is transaction value, not tax at stake, so on a high-volume, thin-margin flow the documentation fine can dwarf any conceivable adjustment. Late payment carries interest at 0.075% per day capped at 730 days, and understatement attracts a 50% fine, doubling on repeat.

Relief is built around voluntary correction, not documentation quality. Under Article 374 a taxpayer that spontaneously recalculates and files a transfer pricing calculation report pays no late-payment interest. If the SRC works through the documentation and proposes a median adjustment, interest runs only from the day after service, with the Armenian text allowing one month to file. Only a full inspection pushes interest back to the original filing date. Note what is absent: nothing in Chapter 73 gives a good local file protection against the adjustment itself. Documentation buys process, not immunity. Whether the 50% Article 403 understatement fine can attach to a transfer pricing adjustment is not addressed and remains genuinely open.

The assessment window is five years for Chapter 73 violations against three generally, stretching to ten where the transactions involve liberal-tax-system jurisdictions or CRS-exchanged accounts. There are no secondary adjustments: Article 364(3) confines the effect to the profit tax or royalty base and expressly rules out recalculating other liabilities, so no deemed dividend follows a primary adjustment. Adjustments also run one way only, upward, and a domestic royalty-payer adjustment carries no corresponding relief for the counterparty.

Dispute resolution and advance certainty

Advance certainty exists on paper. Article 378 allows an APA application to the SRC for transactions with non-resident related parties, operative since 1 January 2024, with procedure and conditions delegated entirely to the SRC. The provision contemplates unilateral arrangements only. Armenia told the OECD it operates no bilateral APA programme, so rollback, filing timelines, published access rules, fees and statistics are all recorded as not applicable. The three-year term extendable by two, and the roughly 45-working-day review, come from practitioner commentary on the SRC procedure rather than any instrument we could retrieve; treat them as indicative and verify.

MAP sits under Article 377 and Government Decision 1727-N of 10 November 2022. There is no fee, transfer pricing cases are in scope, and access survives domestic litigation, though where a court has bound the SRC it cannot agree an outcome departing from the judgment. Collection can be suspended on application, with a 30-working-day decision. Agreements bind only for the case and period concerned, so recurring issues need repeated applications. Every Armenian treaty carries the Article 9(2) equivalent, but arbitration exists in only seven: Austria, Germany, Italy, the Netherlands, Singapore, Sweden and the United Kingdom.

The decisive fact is the caseload. As at February 2024 Armenia reported no MAP cases at all. Combined with the absence of any reported Chapter 73 judgment and the zero bilateral APA programme, this is a jurisdiction whose dispute machinery is entirely untested. Domestically, an SRC act may go to the Appeal Commission, which must decide within 30 days (15 with a law-abiding taxpayer certificate) with silence deemed to grant the complaint, or straight to the administrative courts.

Pillar Two and what changes in 2026

Armenia has not enacted the GloBE rules. There is no income inclusion rule, no undertaxed profits rule and no qualified domestic minimum top-up tax in the consolidated Code as at August 2026. Armenia has been an Inclusive Framework member since February 2019, so in-scope groups with Armenian operations remain exposed to other jurisdictions' IIR and UTPR with no domestic top-up tax to absorb the charge. Amount B is equally absent: no simplified approach for baseline distribution appears in Chapter 73 or Decision 556-N, and a distributor's return must still be established under Article 368.

Two live compliance changes. CbC reporting is the larger one: the framework took effect in 2024 but the obligation bites for years beginning on or after 1 January 2025, so the first Armenian reports fall due during 2026. Exchange remains the weak link. Armenia signed the CbC multilateral competent authority agreement on 5 September 2024, but the OECD peer review records no bilateral exchange relationships in place and repeats its recommendation that Armenia conclude qualifying competent authority agreements. Groups should not assume exchange will satisfy an Armenian filing. The smaller change is administrative: SRC Order 948-N restates the notification form appendix with effect from 1 January 2026, applying to reporting periods after 1 January 2025.

How practitioners should respond

Four priorities. First, test the AMD 200 million aggregate early, and test it correctly: it captures every controlled transaction in the year, including dealings with low-tax counterparties who are not related at all, and PE dealings under Article 363(4) are excluded from the notification test but not from the regime. Second, build the local file to the April calendar, not to the 30-working-day request window, because the Article 402.2 fine is calculated on transaction value and no amount of later diligence undoes it. Third, rebuild any inherited benchmarking study to Armenian range mechanics: full untrimmed set, median as the adjustment point, transaction-year data, foreign comparables justified under Article 367(5). Fourth, use the Article 374 self-adjustment route deliberately, since it is the only real interest relief in the system and it disappears once an inspection starts.

Finally, treat the delegated layer as unfinished business. The APA procedure, the documentation content orders and the CbC and calculation report forms are all SRC instruments we could not retrieve, and the SRC's own site renders its legislation client-side and yields nothing to automated retrieval. In a regime six years old, with no case law and no MAP inventory, the practical answer often lies with the SRC rather than in the text. Ask, document the answer, and keep the file.