Armenian government intends to reduce income tax

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.