Wednesday, January 30 2019 17:46

ArmInfo. Armenia will increase  the non-taxable VAT threshold on turnover from the current 58.35  million ($ 120 thousand) to 115 million drams ($ 235 thousand), but  will exclude from the list of representatives of specialized  activities, in particular accountants, auditors, lawyers and  consultants.

"The assumption that the increased tax burden will be fully included in the cost of the services they provide and, ultimately, will affect the consumer's pocket, has not been proven," Armenian Deputy Finance Minister Arman Poghosyan told ArmInfo.It  should be noted that the previous draft of amendments to the Tax Code, submitted by the Ministry of Finance on the single portal of legal acts of e- draft.am in November 2018, did not provide for such measures. The norm was put into circulation in the new text of the  project posted on the portal on January 23. 

As the initiator of the tax reform announced in November, the  Ministry of Finance of Armenia raised the non-taxable VAT to the  cherished 15 million drams, according to the most modest estimates,  the annual budget losses in the backlog of VAT may be about 11.5  billion drams.New restrictions for accountants, auditors, lawyers and  consultants, according to Pogosyan, do not promise the state treasury  special benefits.  The Ministry of Finance does not have data on the  number of economic entities that, as a result of tax reform, will be  "out of circulation tax". "Innovations do not pursue the goal of  providing additional revenues from specialized activities to the  treasury. The goal is to abandon aggressive tax planning mechanisms  and also avoid distortion of the tax field by clearly outlining the  circle of beneficiaries of the regime," the deputy minister  explained, recalling the practice of previous years, when the  legislator established preferential regimes for a certain category of  business, and as a result, all who feel like it, managed to use it. 

As a result, the true recipients of tax "indulgences" suffered.At  present, the deputy minister does not exclude that in the conditions  of the new tax regulations, tariffs for services in the sphere of  specialized activities will be revised. But if there will be a price  increase, then, in the opinion of Pogosyan, they will be  insignificant and in a much smaller size than the increased tax  burden for entrepreneurs in the sphere. At the same time, he  believes, the scenario in which conditions a business engaged in this  area agrees to work with a lower margin is not excluded.The norm on  raising the threshold for businesses operating in the field of  regulating turnover tax, as the Armenian Ministry of Finance plans,  will be considered effective from January 1, 2019. If before the  adoption of the legislative act by the parliament, the economic  entities exceed the current threshold, the non-taxable VAT in the  amount of 58.35 million drams, even after its legislative increase to  115 million drams, will not be able to return to the field of  turnover tax regulation and will continue to be considered payers of  the VAT. For anyone who has not exceeded the threshold of 58.35  million drams, since the approval of the new standard, it will have  retroactive effect.Meanwhile, as Paylak Tadevosyan, chairman of the  NGO "Protection of Taxpayers", noted ArmInfo, the statement that the  new tax rules will not lead to higher prices in the areas of  specialized activities is somewhat amorphous. "As a result of their  transition to the general tax field - the VAT, the tax burden of many  will increase many times, so it cannot be said that there will be no  price increase or it will be insignificant," he said.Moreover, the  head of Tadevosyan is not entirely clear what the restrictions mean  for entrepreneurs engaged in consulting activities, because many  people can fall under this concept, ranging from organizations that  provide medical services to testing and design bureaus. 

The expert today does not undertake to judge the reasonableness of  the innovation and what it is aimed at, because the authors of the  draft law did not explain the goals and expectations of this  legislative initiative.  In addition, according to Tadevosyan,  starting the year with a new tax regulation and changing the tax  regime conceptually from the middle of the next, with respect to  business, is at least not fair and, most importantly, does not  correspond to the declared spirit of partnership between the state  and the private sector.It should be noted that the draft amendments  "On amendments and additions to the Tax Code of the Republic of  Armenia", on January 23 posted on the single portal of legal acts  e-draft.am caused an uproar in the expert community. As of January  30, 92% of portal visitors were against the document in its current  form. The bulk of the project's opponents opposed restrictions for  representatives of specialized microentrepreneurship and business  activities in the tax field of turnover tax.