Thursday, March 28 2019 15:37

ArmInfo. The package of tax  reforms has been sent to the National Assembly of Armenia. On March  28, Prime Minister Nikol Pashinyan said from the rostrum of the  parliament, answering the question from the MP of ruling faction "My  Step" Armen Khachatryan that the new version of the tax code is  complex and frightening investors.

However, according to the head of the Armenian government, a  philosophy must be laid at the heart of any activity, without which  it is difficult to determine the priorities of tax legislation.  According to him, if today 100 Armenian economists are invited for  problem discussion, 150 solutions will be presented. However, one  thing is clear, Nikol Pashinyan noted, the draft amendments are  aimed, first of all, at simplifying the tax system so that it is  accessible and understandable not only for local but also for foreign  investors.  According to the head of government, it is impossible to  solve existing problems in the tax sphere in one step. There should  be a consistent, phased work to reform the tax system. In this  context, the Prime Minister continued, it is very important to apply  new income tax rates, which are aimed at providing employment with  high wages. "Considering the salary of 80 thousand drams as high is  unacceptable for us, the high salary is 800 thousand drams, 1 million  drams, 2 million drams," the head of government said. He noted that a  high-tech professional should  appreciate lower tax rates in Armenia  compared to other countries. "Our political line is providing  assistance in obtaining high wages," the head of government stated.

To note, on March 7, at the regular meeting of the Armenian  government approved the draft "On amendments and additions to the Tax  Code of the Republic of Armenia". As expected, following the adoption  of the document in the long term, it will provide an additional 0.8  pp. GDP growth, additional consumption growth will be 0.3-0.4  percentage points, and employment - approximately 0.5 percentage  points. Thus, according to the Minister of Finance of Armenia Atom  Janjughazyan, Armenia will increase the non-taxable VAT threshold  from turnover from the current 58.35 million ($ 120 thousand) to 115  million drams ($ 235 thousand). From January 1, 2020, the Ministry of  Finance will also raise the non- taxable threshold for self-employed  citizens and family business entities from 9 million drams and 18  million drams, respectively, to 24 million drams. As a result, they  only have to pay import duties on goods.  From January 1, 2020,  Armenia plans to abandon the licensing tax system with a transition  to a general taxation system. The republic will give up two  alternative taxation systems - self-employed and family  entrepreneurship. A microenterprise with a non-taxable threshold of  up to 24 million drams will come to replace them. Business entities  that carry out specialized activities, in particular, accounting,  advocacy, and consulting will not be considered as micro- business  entities. Microbusiness will be exempted from all types of taxes  other than income tax, which will be 5 thousand drams. From January  1, 2020, Armenia will switch to a flat income taxation system, which,  regardless of the amount of wages, will be set at 23%.  Moreover,  until 2023 the rate will gradually decrease to 20%. In parallel, the  government envisages a gradual return to the previous conditions of  the mandatory pension system. From 2020 to 2022 the government also  proposes to introduce equal rates of income tax and dividend tax for  citizens of Armenia and foreigners, setting them also at 23% (profit  tax from 20% to 18% and dividend tax from 10% to 5% - Ed. note) . The  Ministry of Finance also proposes to fix that the pensions of  residents of individuals received from abroad are not subject to  taxation in Armenia.

It is also planned to increase the minimum price for vodka and ethyl  alcohol - from the current 3,500 drams per 1 liter of 100% alcohol to  6 thousand drams. From July 1, 2019, the Ministry of Finance proposed  to expand the list of products to include beverages with sugar  content of 5 g and more per 100 g of product at a rate of 10% of the  cost, but not less than 30 drams per liter. Due to this, the tax  revenue of the state treasury was planned to increase by 3 billion  drams. Meanwhile, the document approved by the Cabinet of Ministers  considered only carbonated drinks, except miner water, leaving the  rest of the drinks "overboard".  Already from January 1, 2020, the  Cabinet intends to revise the environmental tax rate for emissions of  pollutants into the atmosphere of cars with an engine power of 301  horsepower and more - instead of the current 50 drams for 1l.s set  150 drams. The Cabinet of Ministers of Armenia also intends to  increase consular fees, state duty rates for the provision /  replacement of state numbers, as well as for provision of licenses to  financial institutions.  From January 1, 2020, it is also proposed to  revise the organization's taxation during gambling (including games  on the Internet), totes (Internet totes. In particular, taxation of  totes will be transferred to the field of income tax regulation from  2020, gambling - since 2021. At this stage, the Ministry of Finance  refrains from tax on winnings.  In addition, the turnover tax for  catering representatives up to 10% will not take effect from 2020, as  stipulated by the new Tax Code. To recall, from July 1, 2018, new tax  rates came into force - the licensing tax for restaurants (tax per  square meter) was replaced by 6% VAT. From January 1, 2019, the tax  burden was increased to 8%, and from 2020, it should have risen to  10% of the turnover. It is about maintaining the adjustment, which  entered into force on July 1, 2018, that is, 6% VAT, with the  possibility of a tax deduction of 3% of the documented expenses, but  not less than 4% of the turnover.