UITE: Armenia`s Tax Code draft contradicts with IT field development strategy

ArmInfo. Draft of Armenia's Tax Code contradicts with the IT field development strategy, Deputy Executive Director of Union of Information Technology Enterprises (UITE) in Armenia Hayk Chobanyan stated at the press conference on June 17.

According to him within the recent 3 years, certain achievements have been registered due to adopted new strategy of the field development. However, the expert noted that due to tax reforms all the achievements of the IT field might be neutralized. "The document is aimed against economic development of Armenia and is in contradiction with the country's development interests. I am sure that the draft will endanger not only further attracting of investments but also overall business development", Chobanyan stated.

The representative of UITE also mentioned that the tax burden of IT field totals around 40% as of today (income tax plus VAT). Revision of income tax will lead to increase of tax burden for the employer by additional 25-30%. We will not manage to deal with such a burden", Chobanyan said.

The expert informed that currently around 15 thousand people are involved in the IT field of Armenia and the average salary ranges between 1800 and 2000 USD. "Increase of tax burden is inadmissible for the representatives of the field. I am sure that 15 thousand employees will not stay on the sidelines, and increase of taxes will result in street protests", Chobanyan summarized.

To recall, on June 9, Deputy Head of the Armenian State Revenue Committee Vakhtang Mirumyan said in Parliament that the income tax in Armenia will become graduated. Currently, persons with a monthly salary of up to 120 thsd AMD pay 24.4%, those with a salary ranging from 120 thsd to 2 mln pay 26%, and those with a salary of over 2 mln pay 36%.  Under the new Code, the citizens with a salary of up to 120 thsd AMD will pay 23%, those getting a salary ranging from 120 thsd AMD to 1 mln AMD - 28%, and those with a salary of 1 mln and more - 33%. Those getting 1.5 mln AMD per month will pay 23% for the first 120 thsd; 28 thsd - for the next 880 thsd; and 33% for the part exceeding 1 mln.  He said that the income tax significantly grows for those getting a salary of more than 2 mln AMD.  "Only 800 people receive such a salary in the country," he added.

On June 15, the National Assembly of Armenia adopted in the first reading the new Tax Code of Armenia with 68 pros, 21 cons and 18 abstentions. All the parties, except the ruling Republican Party of Armenia, object to the new Tax Code.  The second reading is scheduled for autumn 2016.