In Armenia, taxation of dividends will be made only after the shareholders` meeting of the company decides on the redistribution of profits

ArmInfo. Dividends will be taxed  only after the shareholders' meeting of the company decides to  redistribute profits. "The current legal norm contradicts the  principles of corporate governance," Armenian Deputy Finance Minister  David Ananyan said at a press conference on December 8. "

According to the Deputy Minister, today's legal regulation says that  if until June 30, following the reporting period at the general  meeting of shareholders of the company, no decision is made to  redistribute profits, the state nevertheless considers them  redistributed and withdraws its share in the form of tax. As  clarified by the representative of the Ministry of Finance, initially  was set a goal - to offer a certain tool in terms of tax  administration. However, at present, it is decided to abandon the  instrument that does not comply with generally accepted principles of  corporate governance.

The proposed amendments to the taxation of dividends also specify the  rights and obligations of individuals - citizens of foreign states  and citizens of RA, who receive dividends as shareholders. The Tax  Code, adopted in the autumn of 2016, provides for taxing the  dividends of individuals-non-residents from January 1, 2017, and  residents as of January 1, 2018, at a rate of 10% and 5%,  respectively. Today, the Ministry of Finance is proposing to specify  the rule of law, because at this stage there is no clear definition  of which period this regulation should cover - from 2000 to 2018, or  after the enactment of the legislative norm. "We propose to impose  taxes on those dividends that were received, accumulated and  distributed by foreign citizens and citizens from January 1, 2017,  and from January 1, 2018, respectively," Ananyan said.

As for the concern of business and expert circles that by introducing  taxation of dividends Armenia creates an additional barrier both for  the business as a whole and for attracting new investments, David  Ananian, responding to the question of ArmInfo, noted that Armenia is  one of the few countries where there was no such kind of tax. "Within  the framework of the EAEU, out of 5 member countries of the Union,  Armenia remained the only republic where dividends were not taxed, we  had to reckon with the legislation of the partner countries, while  the established 5% and 10% in Armenia is substantially lower than in  the EAEU countries," the deputy minister said. At this stage, as  David Ananyan noted, there are no forecasts of how much revenue will  provide the state treasury this type of tax.