ArmInfo.The financial authorities have developed a draft law against tax abuse. This was announced on July 22 at a government meeting by acting Prime Minister of the Republic of Armenia Nikol Pashinyan.
Pashinyan recalled that from January 1, 2020, Armenia switched to a flat income tax system, which, regardless of the size of wages, was set at 23% (from January 1, 2021, the income tax rate was 22%, from January 1, 2022 - 21%, and from 2023 - to decrease to 20% -Ed. note). Despite the skepticism of a number of experts, in 2019, making such a decision, the authorities aimed at increasing tax collections in this area.
According to the acting Prime Minister, the government has already achieved this goal in the medium term. Thus, in the first half of 2021, Armenia's tax collections under the income tax line exceeded the same indicator of 2020 by 28.5 billion drams.
At the same time, according to Pashinyan, a number of economic entities, namely those working in the field of microentrepreneurship, abused the opportunity given to them. Since January 1, 2020, Armenia has abandoned two alternative systems of taxation - self-employed and family entrepreneurship, and they were replaced by micro-entrepreneurship with a non-taxable threshold of up to AMD 24 million. Microbusiness has been exempted from major taxes, with the exception of excise, environmental and road taxes. The income tax for an employee, regardless of the size of the salary, amounted to 5 thousand drams. Thus, the authorities wanted to support small businesses so that they generate more income, and, accordingly, pay more taxes, he said.
Meanwhile, according to the acting head of government, business with an annual income of 100 million drams began to be "split" into 4 parts in order to use the tax "paradise".
In this regard, as Pashinyan noted, the authorities have developed a draft law against such abuses.
Earlier, ArmInfo reported that by the end of 2020, on New Year's Eve - December 30, the Armenian government approved a decision "On approval of measures aimed at narrowing the gap in tax policy", within the framework of which the Ministry of Economy was entrusted with developing the Concept of Economic Policy. According to the draft of this document, Armenia plans to completely abandon the turnover tax and switch to a common taxation system. Within the framework of this document, in the part entitled "Transformation of Income Policy", the Ministry of Economy proposed to abandon the institution of turnover tax with a transition to a general taxation system. According to the country's economic authorities, the turnover tax has become the largest field for conducting "shadow" activities. According to the document, in 2019-2020, about 27 billion drams were collected through the turnover tax, or only 2% of the tax revenues of the state treasury.
Exceptions, according to the authors of the document, will be made for micro-enterprises and small-scale sectors, in respect of which it is theoretically difficult to calculate VAT (insurance, loans, apartment rent, healthcare, small farming). In parallel, which is very important, the Ministry of Economy proposed to introduce a different range of VAT rates (0%, 5%, 10%, 20%). For example, in the service sector (with the exception of trade), lower rates may be set taking into account the low share of goods subject to VAT in the total volume of goods purchased by them.
At the same time, the document proposes to tighten regulations for microentrepreneurship, in particular, to limit the scope of doing business for business entities with services for the sale of goods and services to individuals and to establish the maximum number of employees paid with an income tax of 5 thousand drams by 2 to 3 employees.
