ArmInfo. The Armenian government will consider proposals to reduce income tax rates and effectively expand the instruments of tax administration. The corresponding assignment was voiced by the Acting President. Prime Minister of Armenia Karen Karapetyan on April 12 at a government meeting.
As Karen Karapetyan reminded, in 2017 economic growth was registered at the rate of 7.5%, the planned level of tax collection was also exceeded. "These data serve as a basis for further strengthening the country's economic potential, as well as for ensuring long-term, fundamental and tangible reforms for the general public," the prime minister said. According to Karapetyan, preliminary estimates indicate that it is time to consider the possibility of reducing the tax burden for a more active economic environment. From the point of view of microeconomics, the reduction of income tax rates will lead to an increase in real disposable incomes of the population and will serve as an incentive for hiring qualified employees from the side of business. In parallel with the simplification of the tax burden, Karen Karapetyan believes, it is necessary to improve the tax administration tools in such a way as to significantly reduce the possibility of tax evasion by unscrupulous entrepreneurs. With this in mind, Karen Karapetyan instructed the acting president. Minister of Economic Development and Investments; the Minister of Finance, as well as the head of the State Revenue Committee, in 10 days, to summarize the preliminary estimates, and on their basis to discuss and submit proposals to reduce income tax rates and effectively expand the instruments of tax administration. It should be noted that the issue of reducing the tax burden was acute even during the adoption of the new Tax Code in 2016, but then under the pressure of the IMF and World Bank the new government of Karapetyan passed through the parliament this document. The political opposition also raised this issue. Thus, the opposition bloc Elk suggested revising the scale of income tax in the Tax Code, supplementing it with one more "intermediate scale" for employees receiving salaries in the range of 150,000-300,000 drams, fixing a tax of 26%. "The proposed changes will have a negative impact, including on the part of ensuring the profitable part of the state budget," Finance Minister Vardan Aramyan said in February. The minister recalled that within the framework of the Tax Code, from January 1, 2018, workers pay income tax on a new scale that is more favorable to them. Thus, the tax burden for citizens receiving wages less than 279 thousand drams a month, and this is 90% of all wage earners in the country, has decreased. The change proposed by the "Elk" bloc will provide an additional income for 2,000 citizens on average of about 420 drams. As a result, as Vardan Aramyan noted, the proposal is unreasonable, since it does not envisage mechanisms for compensation of budget losses. Nevertheless, on February 7, 2017, in an interview with ArmInfo, without disclosing the brackets, the head of the financial department assured that if the citizens of the country "give their vote of confidence to the new government" (following the results of the April parliamentary elections - ed.), The government will present a comprehensive program development of the economy. "The most important moment in this program will be an increase in indirect taxes and a certain easing in terms of direct taxes in order to increase labor productivity and promote the expansion of production and exports," explained the head of the Ministry of Finance. Recall that today the income tax rate is 23% for incomes not exceeding 150 thousand drams ($ 310). According to the next scale up to 2 million drams ($ 4 thousand), the tax rate is raised by a progressive curve to 35%. The income exceeding 2 million dramsis taxed with a bit more rate.