ArmInfo. The fiscal risks associated with the application of the new provisions of the Tax Code of Armenia should not be expected. RA Deputy Minister of Finance Arman Poghosyan announced this on June 12 at the hearings in the parliamentary commission on economic issues.
According to him, as a result of applying the new provisions of the Tax Code, the estimated losses of the state budget of Armenia will be 45 billion drams. It is expected that the estimated losses of the state treasury on the income tax line will be 30 billion drams, and on the income tax line - 15 billion drams. Nevertheless, according to the deputy minister, the actual losses will be at the level of about 16 billion drams, since all risks will be reduced due to the revitalization and diversification of the economy. Today, Arman Poghosyan continued, in Armenia there is a situation in which the gaming business plays a significant role in the country's SRC, but in the structure of taxes there is a small proportion. "We want to change the vector of tax burdens," the deputy minister stressed. He added that export-oriented companies will become a priority for the government of the country so that they "start breathing a little." And if in 2020 it is not possible to collect 15-16 billion drams from 45 billion drams, it is planned to fill this gap from other sources without damaging economic activity. In turn, another Deputy Minister of Finance Armen Hayrapetyan noted that the breach of 16 billion drams can be solved by strengthening tax administration.
To recall on June 7, the National Assembly of Armenia in the first reading adopted the draft amendments to the Tax Code of the country. 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. The non-taxable VAT threshold for turnover will be increased from the current 58.35 million ($ 120 thousand) to 115 million drams ($ 235 thousand). From January 1, 2019, 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 the 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. Micro-business entities will not be considered as business entities that carry out specialized activities, in particular, accounting, advocacy, and consulting.
Microbusiness will be exempt 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 outside are not subject to taxation in Armenia. The Ministry of Finance of Armenia in the new document took into account the interests of auto-importers - individuals. The rule obliging them from June 1, 2018 when selling a 2nd car to pay a 20% income tax will be revised and reduced to 1% of the price of the car, but not less than 150 drams for each horsepower. The norm will be given a retroactive effect from July 1, 2018, which will allow to recalculate the tax debt accumulated since the entry into force of the new tax regulation. In addition, the Ministry of Finance of Armenia proposes to exempt from paying tax in the case of selling a car after 365 days after its purchase.
In 2019, the Ministry of Finance of Armenia proposes to review and "enrich" the list of excisable goods. In order to compensate tax losses of the budget as a result of lowering the income tax and turnover tax, and their total negative effect on the budget is estimated at 39 billion drams, the Ministry of Finance proposes to increase the rates of excise tax on tobacco products and alcohol from July 1, 2019 as well as beer. A system of annual adjustment of the excise tax rate (by 4%) will be introduced. Electronic cigarettes (according to the IGOS technology) will be taxed in the same way as traditional ones. The initiative will provide additional revenues of 6-7 billion drams to the state treasury. 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 project proposes to expand the list of excisable goods, including drinks with a sugar content of 5g or 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, tax revenues of the state treasury will increase by 3 billion drams.
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, install 150 drams. The Cabinet of Ministers of Armenia also intends to increase consular fees, state duty rates on the provision / replacement of state numbers, as well as non-provision of licenses to financial institutions. From January 1, 2020 it is also proposed to revise the taxation of the organization and conduct of gambling (including games on the Internet), sweepstakes (Internet sweepstakes. In particular, the taxation of sweepstakes will be transferred to the field of income tax regulation since 2020, gambling - from 2021. At this stage, the Ministry of Finance refrains from the tax on winnings. In addition, the turnover tax for catering representatives up to 10% will not enter into force from 2020, as provided for by the new Tax Code. The new tax rates came into force in 018 - the license tax for restaurants (per square meter) was replaced with 6% VAT. From January 1, 2019, the tax burden was increased to 8%, and from 2020 it should was up to 10% of turnover. This is about maintaining the adjustment that came 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 turnover. Profit tax with the purchase and sale of property between individuals will be exempted from income tax. Transactions between a natural person and an individual entrepreneur on the acquisition of a land plot will also be exempted from the payment of a 10% income tax.