Tuesday, June 25 2019 16:33

ArmInfo.State fees for financial organizations will be increased in Armenia. At the June 25 sitting, the RA National Assembly, by 73 votes 'for' and 32 "against", in the second and final reading, amended the Tax Code and the a raft of legislation. So, from now on, banks will pay a state duty of 8 million drams, instead of the current 3 million drams.

A duty will also be introduced for each branch of the bank - in the amount of 500 thousand drams for the first year of activity, and then - 1 million drams per year. Compared with the initial draft tax changes developed by the Ministry of Finance, during discussions in the legislature, the proposed state duties for pawnshops and currency exchange offices were reduced. In particular, for pawnshops for the first year of activity a bar will be set at 1.5 million drams, for subsequent years - 2 million drams (instead of the current state duty of 100 thousand drams, and the proposed 6 million drams). The state duty for private exchanges has increased to 500 thousand drams (10 fold increase) against the bar of 3 million drams proposed earlier by the Ministry of Finance. At the same time, from 2020, within three years, Armenia plans to lower the income tax from 20% to 18% for all companies. Thus, the tax liabilities of these organizations in this line will be reduced by 2 percentage points. To recall, since the beginning of March this year pawnshops and currency exchange offices protested against the proposed changes to the Law on State Duty, suggesting a 60-fold increase in state duty for pawnshops and currency exchange offices, stating that most of them will close and about 1,300 people will remain out of work. New regulations, as noted by the representatives of the sector, are aimed at withdrawing small players from the market - lenders and currency dealers. At the same time, they warn that this step will entail the formation of a "shadow market", which will operate outside the purview of the CBA. Meanwhile, according to financial analysts of ArmInfo, the measure to which the Ministry of Finance wanted to resort has quite serious grounds. First, the problem is the need to withdraw from , first of all, uncontrollable from the point of view of tax payments, pawnshops and private currency exchange points, the real turnover of which, according to some estimates, is many times higher than reporting figures. Secondly: The current low thresholds for entering these financial market segments do not justify themselves completely, since, in contrast to fully accountable and tightly regulated regulations by the Central Bank of banks and credit companies, pawnshops feel much more at ease and as a "last resort" for desperate potential borrowers, use inflated lending rates and less "attentive" to the assessment of collateral. Thirdly: the distribution of licenses by the Central Bank of Armenia to too many pawnshops (127 according to 2018) and private currency exchange points (213 for 2018) caused commercial banks and credit companies to noticeably lose their positions in the market both in the credit and foreign exchange segments, while at the same time incurring much greater obligations to the state as costs. Therefore, analysts say, it is possible that in fact the government, with the completely explainable silence of the mega-regulator represented by the Central Bank of Armenia, wanted to kill three birds with one stone: remove the unorganized, including the gray market, the cash currency market, increase budget revenues at the expense of state duties and other payments and to clear the market for the work of commercial banks and credit companies, forcing all players to work in a single competitive field.