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.