Tuesday, January 29 2019 15:14

ArmInfo. From January 1, 2020, the Ministry of Finance of Armenia proposes to increase the preferential tax threshold for microbusiness to 24 million drams,  limiting the circle of those who can enjoy it. "In particular,  business entities engaged in accounting, legal, consulting and PR  services cannot be considered as subjects of microentrepreneurship,"  Armenian Deputy Finance Minister Arman Poghosyan told ArmInfo in an  interview.

Meanwhile, the draft amendments "On amendments and additions to the  Tax Code of the Republic of Armenia" submitted by the Ministry of  Finance on the single portal of legal acts e-draft.am in November  2018 provided a threshold of 20 million drams.

According to the draft, the microbusiness preferential taxation  system, which will replace the two alternative taxation systems-  self-employed and family entrepreneurship, can be used by legal  entities, individual entrepreneurs, and individuals who are not  individual entrepreneurs, if their annual turnover does not exceed 24  million drams. Individuals who are not individual entrepreneurs can  use this system, without registering as an individual entrepreneur,  if they are engaged in simplified activities established by the Tax  Code.

For them, the Ministry of Finance has provided a number of  preferences. Thus, micro-business entities are exempted from the  obligation to calculate and pay to the state budget all types of  taxes generated by the results of their activities (including as a  tax agent, as well as obligations to pay overpayments on income tax).  They undertake to pay taxes on goods imported to Armenia, including  from the EAEU, to pay environmental and road taxes, as well as on  income from the alienation of real estate. In the course of their  activities, they can attract individuals to work as employees, and  the income tax on them will be paid in the amount of 5 thousand  drams.

At the same time, the legislator establishes a number of  restrictions, narrowing the circle of possible beneficiaries of the  system. Organizations and individual entrepreneurs engaged in trading  activities in trading centers, places of trade and fairs within  administrative borders of Yerevan or outside the capital will not be  considered microbusiness. Business entities engaged in the field of  accounting, law advocacy, consulting, providing translation services,  as well as in the field of advertising, information gathering and  processing, design, marketing, engineering and testing and  development and technology will not be considered microbusiness too.  Banks, credit organizations and insurance companies, participants in  the securities market, pawnshops, currency exchangers, investment  funds, fund managers, payment and settlement organizations, notaries,  as well as sweepstakes and bookmakers cannot be a beneficiary of this  system. Those entities who, during the tax year, will be guilty for  violations of the rules for operating cash registers three times will  also be deprived of the right to be called a microbusiness.

At the same time, those who are concerned that the list is somewhat  abstract, and even medical centers may face the restrictions,  Arman  Poghosyan urged not to go to extremes. "Everyone understands that  dentist, before starting treatment, must decide on the reasons,  consult the patient. So all this is not consulting in its pure form,  but part of the treatment," he said.

It should be noted that at this stage in Armenia there are 5  alternative tax systems - self-employed (certain types of activities  with annual turnover up to 9 million drams are exempted from taxes,  except for import duties), family business entities (family members  with turnover up to 18 million drams, pay import taxes only),  turnover tax payers (with a turnover of up to 58.35 million drams)  and licensing tax (carrying out certain types of activities, pay a  fixed tax, without restriction on turnover), as well as those that  are are in the general field of taxation (VAT and profit tax payers).

According to the Ministry of Finance, as a result of the availability  of alternative tax systems, difficulties arise, discrepancies and  corruption risks, a business becomes more vulnerable in relations  with tax authorities. In addition, 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. 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.

Thus, starting from January 1, 2020, Armenia plans to abandon the  patent tax system with a transition to a system of general taxation.  At the same time, the republic will abandon two alternative tax  systems - self- employed and family entrepreneurship. These systems  will be replaced by a new one - the micro-enterprise taxation system.  Within the framework of this initiative, the Armenian government,  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. As stated in the draft,  according to the current regulations, today certain activities with  an annual turnover of up to 9 million drams are exempted from taxes,  with the exception of import duties. From the beginning of 2019,  family members with a turnover of up to 20 million drams will be  considered subjects of family entrepreneurship, against the previous  18 million drams. As a result, they only have to pay import taxes.