ArmInfo. The World Bank gives a positive evaluation to the Tax Code, recently adopted by Armenian parliament (TC), Gohar Gyulumyan, the chief economist of the World Bank Yerevan office.
According to Gyulumyan, the adoption of tax code of Armenia was the objective necessity. During recent three years specialists of the bank observed how Armenia increased the volume of external debt for 7-8% annually. At the same time, starting from 2013, due to global financial crisis, the external borrowing turned very problematic.
The volumes of transfers coming from Russia also decreased due to economic situation in that country. According to Gulumyan, there is no reason by now to hope former capacities will recover, because the factors that lead the Russian economy to the present situation, still do exist. The investments volume also dropped down, particularly in respect to private sector. Such a picture could be observed maybe in 90ties. Armenia is a small country, functioning mainly due toexternal financial flows, and now has no option except increasing own revenues.
According to the representative of World bank, Armenia cannot fund the 4-5% state budget gap at this stage. In this context, there is a need to thin over the option of securing revenues due to internal resources,
" It became obvious, that there is no any other option except studying the possibilities and dimensions, where the previous tax code set preferences, and to reduce those preferences where possible, to increase the tax load in respect to rates, to improve the administration and to bring in the taxation field that part of economy not participating to tax capsulation processes, Gyulumyan stated.
To recall, Armenian National Assembly passed the second reading of the draft new Tax Code with 79 votes "for," 24 votes "against," and 1 "abstention" on September 29. The experts and business community criticized the new Tax Code. One of the reasons of urgent adoption of the document was IMF's requirement related to providing regular assistance to the country amounted to $130 mln. The tax based incomes estimated in the Draft Budget 2017 at AMD 1 trln 135 bln are justified with the expected 5 % GDP growth and will not generate any stricter conditions for business, Vardan Aramyan, the Minister of Finance stated answering ArmInfo question.
According to the Minister, about AMD 16 bln is expected to receive in respect to import based taxes. This year large volumes of import has been expected from third countries, but actually the import flow came from EEU countries, with less tax expectations accordingly. The factor of investment projects reated VAT postpones could not be denied as well, Aramyan mentioned. Particularly, in 2016 the Government rendered a payment grace for AMD 3 bln more than expected.
As Minister ensured, already next year any unjustified intervening to business activities will be cancelled, as well as unjustified taxation. And the tax load should be increased for those who wok "in the shadow" and do not observe the law. In this context the expectations in respect to Draft Budget, which are higher than those for this year will not affect business conditions.
To remind, the tax based budget revenues for 2017 are estimated at AMD 1 trln. 135 bln, or 21% GDP, which is 0,3% higher than the same indicator for 2016 ( AMD 1 trln 129 bln in 2016- and AMD 1 trln 065 bln in 2015 ). Armenia's budget revenues in 2017 will form AMD 1 trlan 210 bln (about $2,55 bln.). Tax based revenues will form 93,8% of all the budget incomes: benefit based revenues are estimated at AMD 347,2 bln, profit based taxes - at AMD 134,2 bln, custom fees - AMD 53,6 bln, environment fees -at AMD 32,7 bln, license fees and turnover tax - AMD 24,3 bln,. In spect to direct social security fees AMD 14,3 bln income is expected.