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6.3. Depreciation and Amortization

Effective 1 January 2018, fixed assets (except goodwill and land) can be depreciated using the straight-line method based on the number of years of useful life as prescribed. For the period from 1 January 2014 until 31 December 2017, fixed assets were depreciated at prescribed rates.

The minimum depreciation period (in years) and the depreciation rates (in %) are as follows:

Assets Minimum Depreciation Period (in years) effective from 1 January 2018 Maximum Annual Depreciation Rate (%) Effective from 1 January 2014 up to 31 December 2017
Commercial and industrial buildings 20 years 7.5%
Hotels, resorts, rest houses 10 years 15%
Calculating devices and computers 1 year 100%
Robot equipment and assembly lines 3 years 50%
Other fixed assets 8 years 30%
Production equipment 5 years NA

Land cannot be depreciated. However, capital investment for the improvement of land can be depreciated over a period of 8 years.

Effective 1 January 2018, intangible assets (excluding goodwill) can be depreciated over the useful economic life of the asset or 10 years, whichever is less. For the period 1 January 2014 until 31 December 2017, intangible assets were amortized over the asset's useful economic life or at the rate of 20% per annum.

Fixed assets with a book (residual) value not exceeding AMD 50,000, as of the last day of the reporting period, are eligible for 100% depreciation rate.

For the period after 1 January 2018, the annual depreciation is calculated by dividing the acquisition cost or revalued cost of the asset by the depreciation period (useful life) for the relevant group of fixed assets. The taxpayer has an option to choose a depreciation period that is higher than the prescribed minimum depreciation period (see above table).

For the period after 1 January 2014 until 31 December 2017, the taxpayer could opt for a lower depreciation rate than the prescribed maximum depreciation rate. The annual depreciation was calculated as the product of:

(i) the carrying value of the non-current asset group as of the end of the reporting date; and

(ii) the annual depreciation rates specified for the group.