Armenian Economy Ministry stands against taxation of dividends

ArmInfo. "The following reason is fundamental for us- if the tax on dividends may become an obstacle for investments it should not be applied", Armenian Economy Minister Artsvik Minasyan told journalists today.

According to him right from the beginning the adoption of the Tax Code of Armenia did not aim at ensuring budgetary inflows and creating obstacles for business representatives, quite the opposite. "The idea was to ensure economic development of Armenia. Everything else might have derived from the main idea", he stated. In the long term the document should have become the legal basis not being subject to frequent revision and change, it would have contributed to sustainable development of Armenia's business- environment. "Any other provision contradicting to this principle should naturally be revised", the Minister stated stressing that any provision, which may have negative impact on the business establishment in Armenia will be definitely revised.

The Minister did not rule out some positive points of the proposed draft of Armenia's Tax Code, however he noted that at the background of the proposals to increase taxes the expected positive effect is either neutralized or makes the whole process of reforms senseless.

The Minister noted that despite the fact that the Ministry of Economy has not been involved in work of inter-ministerial commission on drafting Tax Code of the country it intends to apply to the cabinet of ministers with a proposal to refuse from the idea of taxation of dividends. "The expected inflows in the financial sector of Armenia can ensure higher profitability than taxation of dividends", he noted.

To recall, according to the representatives of business and experts many of the provisions of the Tax Code may become obstacle for development of Armenia's economy. Thus, EBRD Business Support Office Head Gevorg Poghosyan mentioned that the articles of the Tax Code proposing new instruments of administration as well as change of turnover tax are the main ones hindering development of small business.  According to him taxation of dividends may become a serious obstacle for attracting foreign investments. "Armenia already traditionally faces difficulties in attracting investments, due to a number of factors. The tax on dividends may become a regular obstacle for attracting foreign investments", he noted.

To recall, 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.