ArmInfo.Armeni's government plans to revise the turnover tax this year and narrow the scope of beneficiaries of among microbusinesses in 2025.
Currently, turnover tax (replaces VAT and income tax) is paid by business entities whose annual turnover does not exceed 115 million drams (from January 1, 2020, Armenia returned to non-taxable annual turnover up to 115 million drams - ed.). This group includes SMEs, individual entrepreneurs and notaries. We are talking, in particular, about payments of 5% from the turnover of commercial activities and 3.5% from industrial activities. According to the Ministry of Finance, in terms of turnover tax for 10 months, revenues to the state treasury, compared to the same period in 2022, increased by 27.3% - by 10.7 billion drams or up to 50 billion drams (2.8% of all taxes).
The authors of the bill, the Ministry of Finance, points out that the main goal of the turnover tax system as an alternative to the main taxation system is to provide business entities with the opportunity to carry out activities in conditions of simple tax accounting and soft administration.
In particular, today a 5% turnover tax rate has been established for entrepreneurs in the field of trading activities, with the possibility of deducting 4% of documented expenses from liabilities, but not less than 1.5% of turnover. As part of the initiative, it is proposed to set a rate of 10% of income with the possibility of deducting 9.5% of expenses, but not less than 1.0% of turnover. Then the effective tax will increase from 2.3% to 4.1%, providing the state treasury with additional taxes in the amount of 4.9 billion drams.
Representatives of public catering at this stage work with a 6% turnover tax with the possibility of a tax deduction of 3% of documented expenses, but not less than 4% of turnover. As the Ministry of Finance previously stated, Armenian restaurateurs currently pay an average of 4.3% of sales turnover, which they assess as a low tax burden. In this regard, it is proposed to establish a 12% turnover tax with the possibility of a tax deduction of 9% of documented expenses, but not less than 3.5% of turnover. In this case, the effective tax will increase from 4.3% to 6.6%, providing the state treasury with additional taxes in the amount of 4.9 billion drams.
Changes are also planned for representatives of production activities. Currently the sales tax rate is 3.5%. It is proposed to set a rate of 7% of income with the possibility of deducting 5% of expenses, but not less than 3.5% of turnover. In this case, the effective tax will increase from 3.0% to 5.3%, providing the state treasury with additional taxes in the amount of 0.6 billion drams.
For other types of activities, the current sales tax rate is 5%. It is proposed to set a rate of 10% of income with the possibility of deducting 6% of expenses, but not less than 4.5% of turnover. In this case, the effective tax will increase from 5% to 8.5%, providing the state treasury with additional taxes in the amount of 8.7 billion drams.
The adoption of the project promises the state treasury an annual increase in turnover tax revenue of approximately 17.8 billion drams.
