ArmInfo. The current head of the Ministry of Finance of Armenia and his colleague who recently left this post believe that the beginning of 2019 is the most probable time for the revision of income tax rates.
This opinion was expressed in the conversation with the ArmInfo correspondent by the Minister of Finance Atom Janjugazyan and ex-minister Vardan Aramyan. They said that in the context of clarifying the country's tax policy in July, a technical assistance group of the International Monetary Fund (IMF) will arrive in Armenia.
According to the ex-head of the Armenian Ministry of Finance, representatives of the IMF in the framework of promoting economic growth of the RA will once again study, "rethink" the tax policy of the republic. It was with the technical assistance of the IMF that Armenia developed the Tax Code, and also revised the country's fiscal rules. During the visit, as Aramyan pointed out, within the framework of fine- tuning the tax policy in the medium and long term, the parties will also touch on the possibility of revising the income tax and turnover tax in Armenia.
The work on the "rethinking" of the Armenian Tax Code, adopted not so long ago - in September 2016, will last at least 3-4 months. The main vector of changes, according to Aramyan, will be directed towards increasing indirect taxes (VAT, excise tax) and reducing direct (labor and capital). In this context, according to Aramyan, the most likely period for reviewing the rates of income tax falls at the beginning of next year.
Minister of Finance Atom Janjugazyan, in turn, notes the obviousness that the reduction in income tax in the short term includes fiscal risks. For today, as the head of the Ministry of Finance has informed, a variant of reducing the rate from the current 23, 28 and 36% to 20 and 25% is considered in particular. In this case, the budget losses will make 45-46 billion drams, counting on 600 thousand workers. Proceeding from this, initiating a rate cut, the Ministry of Finance should be sure that the losses for the state budget will be reimbursed by means withdrawn from the "shadow". Otherwise, as the minister noted, Armenia will have to go on increasing the debt burden to cover the budget deficit, which is extremely unacceptable. Thus, according to the expert, the reduction of income tax in this fiscal year is unlikely. 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 the 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" proposed revising the scale of income tax in the Tax Code, supplementing it with one more "intermediate scale" for employees receiving salaries in the range from 150 thousand to 300 thousand AMD, fixing a rate of 26%. "The proposed changes will have a negative impact, including on the part of ensuring the profitable part of the state budget," the then Minister of Finance Vardan Aramyan said in February. He considered this proposal unreasonable, since it does not provide for mechanisms for recovering budget losses. We also note that, according to the rough estimates of the Ministry of Finance, raising the VAT by 1 percentage point, it is possible to provide the treasury with an additional 20 billion drams.
