Tuesday, December 4 2018 16:22
Naira Badalian

Starting from Jan 1, 2020, a new micro-business taxation system will  be introduced in Armenia

Starting from Jan 1, 2020, a new micro-business taxation system will  be introduced in Armenia

ArmInfo. Starting from January 1, 2020, a new micro-business taxation system will be introduced in Armenia. At the same time, the republic will abandon two alternative  tax systems - self-employed and family entrepreneurship. Armenian Deputy Minister of Finance Arman Poghosyan told reporters on December 4 at a press conference.

According to him, at this stage there are 5 alternative taxation  systems in Armenia - self-employed, family business entities, payers  of sales tax and patent tax, as well as those in the general field of  taxation - VAT and income tax payers. As a result of the planned  reforms, their number should be no more than 3 - the micro-enterprise  taxation system, turnover tax payers and those working in the general  field of taxation.  According to the Ministry of Finance, as a result  of the availability of alternative tax systems, difficulties  discrepancies and corruption risks arise, a business becomes more  vulnerable in relations with tax authorities. In addition, as  Poghosyan pointed out, against the background of the availability of  such a "range" of alternative taxation systems, there is a complete  discrepancy between business income and taxes paid by them. The  Ministry of Finance has repeatedly stated that as a result of various  tax benefit, the annual tax loss of the state treasury is estimated  at 442 billion drams.

Within the framework of this initiative, the Government of Armenia  represented by the Ministry of Finance proposes to increase the  non-taxable threshold for self-employed citizens from 9 million drams  to 20 million drams from January 1, 2019. According to the current  regulations, today certain activities with annual turnover of up to 9  million drams are exempted from taxes, with the exception of import  duties.  Starting from  the next year family members with a turnover  of up to 20 million drams will be considered entities of family  business, against the current 18 million drams. As a result, they  only have to pay import duties.

At the same time, as of January 1, 2020, the Ministry of Finance will  start a significant simplification of the taxation system for small  businesses. In particular, instead of two alternative tax systems -  self-employed and family entrepreneurship, the government intends to  introduce one micro-enterprise taxation system.  This system can be  used by both legal entities and individual entrepreneurs and  individuals who are not individual entrepreneurs, if their annual  turnover does not exceed 20 million drams.  Those organizations and  individual entrepreneurs operating in shopping centers, retail  outlets and at fairs within the administrative borders of Yerevan or  outside the capital will not be considered micro-business entities.  In the course of their activities, they can attract individuals to  work as employees, and income tax on them will be paid in the amount  of 5 thousand drams per month.

In addition, from January 1, 2020, Armenia will also completely  abandon the patent tax system (those carrying out certain types of  activities pay a fixed tax, without restriction on turnover).  "The  proposed document is aimed at improving the competitiveness of the  national economy and investment attractiveness by changing the system  of redistributing the tax burden, as well as simplifying the tax  system of microbusiness and strengthening fiscal stability," Arman  Poghosyan said.  Earlier, ArmInfo reported that the Ministry of  Finance of Armenia submitted to the public a draft law "On amendments  and additions to the Tax Code of the Republic of Armenia". The  document was posted on the single portal of legal acts e-draft.am.

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