ArmInfo.On November 19, in a conversation with journalists, Chairman of the State Revenue Committee (CGD) of Armenia David Ananyan explained the initiative to tax remittances to individuals.
According to Ananyan, today there is no so-called bill on the taxation of remittances of persons who went abroad to earn money. According to the country's chief tax officer, in the pre-election period, many may wish to speculate on the topic in order to earn political dividends. Meanwhile, as the head of the CGD pointed out, the speech is only about the total declaration of incomes of the population of Armenia from 18 to 65 years from January 2020. "At present, no decision has been made on whether remittances of citizens from abroad will be taxed as well. In any case, the initiative will pass through an expert discussion, and then it will be handed over to the public," he stressed.
However, if, following the results of public discussions, it will be decided that these monetary receipts in the republic can be considered incomes of citizens, then they will be included in the final income statement. "But the fact that they will be included in the declaration does not mean taxing them, because we do not pursue the goal of taxing income that in another country was already taxed by an identical type of tax," Ananyan said.
According to him, this initiative is also considered in the context of reducing the "shadow" in the Armenian economy. "If we nevertheless made the final decision to eradicate the shadow, then we should think about the formation of the institution of universal declaration. We have been thinking about this for 27 years, but we are postponing the deadlines all the time. Today we have this opportunity," said Ananyan. As for the mechanism of taxation of migrant workers, as the chief tax officer explained, if a family member transferred money to the RA, the recipient of these funds is not a payer of this type of tax. The tax will ask this tax from the citizen who sent these funds only after he returns to RA. If the sender is not a relative of the recipient, then the latter must justify the purpose of the money transfer, and only on the basis of this will it be decided whether to tax the transfer or not.
In the event that the person who received this income has already paid the tax abroad, in order to avoid double taxation, he will have to submit the relevant certificates to the SRC. Then the tax will be able to withdraw the difference and collect tax according to Armenian laws. In this case, if a migrant worker worked in the Russian Federation, where income of individuals is taxed at a rate of 13%, he will pay the difference of 10% to the Armenian budget. If his work activity was carried out in a country with a larger amount of income tax than in Armenia, then this amount will be considered overpayment, knee in his "personal tax office", according to which the amount of the person's tax obligations will be adequately reduced next year. And if financial support to an RA citizen came by transferring the amount by an "envelope" through acquaintances or friends, and not by money transfer, then declaring this type of income is a personal choice of every citizen, and the taxman will have to trust the taxpayer. Let us recall that within the framework of the initiative, all Armenian citizens from 18 to 65 years old will become potential income tax payers (23%) from 2020. Thus, recipients of cash transfers from abroad, villagers and all self-employed people will be taxed.
The inflow of remittances to Armenia in 2017 amounted to about 15% of GDP or 1,756.4 million (an increase of 14.5%). Most of all transfers to Armenia come from Russia. In 2017, their volume amounted to about $ 65 billion, or about 10% of the country's GDP. The Central Bank of Armenia previously published the total amount of cash transfers from abroad to Armenia in the period from 2004 to 2017. According to the data, over the period, 23.7 billion dollars were transferred to the names of individuals in Armenia, 18.2 of which did not have the character of commercial relations. On average, the average amount of remittances per year during this period was $ 1.7 billion.