Deputy Minister: 35 thousand micro-entreprises are  registered annually in Armenia, which is a rather large number

ArmInfo. 35 thousand micro-entrepreneurship entities are registered annually in Armenia, which is a rather large number. Arman Poghosyan, Deputy Minister of  Finance of the Republic of Armenia, stated this at a meeting of the Parliamentary Standing Committee on Economic Affairs on January 13.

According to him, since the application of amendments to the Tax Code  from January 1, 2020, the number of micro-entrepreneurship entities  began to grow rapidly, exceeding the forecasted indicators of 22  thousand entities. As the Deputy Minister noted, the reason for this   is the income tax, from which these entities are exempt, making only  fixed payments in the amount of 5 thousand drams.

As a result, Arman Poghosyan continued, hired workers, having  officially submitted applications for the calculation, allegedly move  into the field of micro-entrepreneurship, concluding an agreement  with the same employers, continue to work in the same companies, at  their workplaces and with the same wages.  From a substantive point  of view, nothing changes in the lives of these workers, but employers  get the opportunity to pay less funds to the state budget. On the one  hand, income tax is being lost, which last year was 23%, and since  this year - 22%, and on the other, the principle of justice is  violated. As the Deputy Minister noted, in addition, the use of such  a mechanism enables the employer to reduce the amount of income tax.

Now the government is discussing two options for solving the problem  - removing the 5 thousand drams rule and transferring passive income  to the tax system. The logic of tax reforms in this area did not  provide for the exemption of passive income from taxation, it was  aimed at exemption from taxation for transparent micro-businesses  with little income.