ArmInfo. David Ananyan, Chairman of the State Revenue Committee of Armenia (SRC) advocates revising the income tax refund program in the framework of mortgage lending and reducing the cost of one transaction from the current 55 million to 35 million drams, Ananyan said at a press conference on October 16.
According to him, before making a discussion on this issue, the goals of the program should be understood: whether these goals are social or aimed at supporting the construction business. "If it pursues a social goal, then the tool has the right to exist, and if it serves the purpose of supporting business, then I, as an economist, do not consider it justified and this is not the sector that the state should support. There are export-oriented business areas, in which the state can invest much more effectively, "he said.
Ananyan recalled that when the program was launched, the return on funds amounted to 600-700 million drams, according to data as of October 15 this year, it already totals 5.5 billion drams, and by the end of the year, the figure will reach 8-9 billion drams.
According to the head of the SRC, this program needs to be reviewed and agreed upon. "If we all decide that it has a social orientation, then it is necessary to review the threshold of the transaction - the current bar of 55 million drams (about $ 115 thousand) is a very high figure, which should be reduced to 35 million drams (almost $ 74 thousand), "Ananyan said.
At the same time, as the Chairman of the SRC pointed out, today the government does not hold discussions or have intentions to revise the program. "But I'm going to raise this issue in government - let's see if we are able to bear this burden over the next years. In my opinion, there will be difficulties, " the chief tax officer concluded.
Earlier, in an interview with reporters, the former Minister of Finance of Armenia Vardan Aramyan stated that instead of stimulating the non-exported sector of the economy, in particular, the construction sector, the country's authorities should take very unpopular steps to ensure long-term economic growth. In particular, programs that significantly contribute to apartment building need to be rethought.
"In 2016, when this tool was introduced, the main idea was that it should be economic - give an incentive to capital construction and after a while the Government should exit this program," he explained. According to Aramyan, if a social component is attached to the program, then its maximum threshold should be comparable with the maximum cost of purchased housing under the "Affordable Housing for Young Families" program of 30 million drams in case of buying an apartment in the primary market (from the developer), and in the secondary - 25 million drams.
However, in a conversation with representatives, Deputy Prime Minister Mher Grigoryan declared that in the current system one should not seek for attempts to stimulate the construction boom. "Maximum cost for 55 million of acquired property for the return of income mortgage interest tax is thereby the social threshold that is not worth revising, "he said.
To recall, in 2017, the financial authorities of Armenia stated that the legal norm in force since November 2014 aimed to form stable and solvent demand in the field, as well as solve social problems. There were no restrictions on the number of such loans or the social status of the buyer. As a result, the social component turned out to be insignificant. The Ministry of Finance monitoring revealed that most often the legal norm is used by those who do not have the goal of solving social problems, but are only enriching themselves by acquiring another property. The Armenian government stated that if there is a desire to stimulate the economy by injections at the expense of the state budget, the real estate market is not the priority direction of the economy that requires investments from the state. As a result, the authorities decided to focus resources on maintaining the exclusively social component of the program - the legal norm should support those who actually solve their social issues. In order to mitigate such risks, the Government decided to take a number of restrictions. In particular, from January 1, 2018, interest will not be compensated for in a transaction exceeding 55 million drams (about 115 thousand dollars). The amount, according to the authors of the document, is the equivalent of the cost of an apartment of 135-140 sq.m in the center of Yerevan. The second restriction concerned the amount of income tax that the state returns to the "mortgage" - within the framework of one transaction no more than 1.5 million drams per quarter, regardless of the number of borrowers or co- borrowers. For a young family, if a couple acts as a borrower and co-borrower, this means that the monthly maximum amount of income tax in the form of a refund from the state treasury that they can apply for is equal to 500 thousand drams (commensurate with their monthly joint income of 1.6 or 1.7 million drams). And thirdly, it was decided that from January 1, 2018, the preferential program can be used only once, whether it is a borrower or a co-borrower.
As for the program "Affordable Housing for Young Families", here the maximum cost of purchased housing is 30 million drams - in case of buying an apartment in the primary market (from the developer), and in the secondary - 25 million drams. To participate in the program, the total age of the spouses should not exceed 70 years, the interest rate is maximum 7.5% in Yerevan and 5.5% in the country's regions (on the secondary real estate market), since in the first case the state will subsidize 2% out of 9.5% per annum and in the regions - 4%.