ArmInfo. Deputy Minister of Finance of Armenia Arman Poghosyan explained what solutions are proposed for public organizations providing free consulting and legal assistance within the framework of new tax amendments.
On November 19, at parliamentary hearings on the proposed amendments to the Tax Code in the area of turnover tax, the Deputy Minister recalled that today there are lawyers who provide legal assistance to certain social groups and individuals on a pro bono basis - free of charge. And if, in the case of their functioning in the turnover tax system, this does not have tax consequences for them, then in the case of their transition to the general tax field, as planned from January 2025, there will be consequences.
The Armenian government sees a solution to this issue as a result of institutional changes, Poghosyan noted. Specifically, in the case of legal services, the institution of the public defender functions, financed from the state budget, and the authorities are committed to the consistent development and increase of the potential of this institution. This will be done through additional allocations, compensation for a number of expenses, and an increase in human resources, thus ensuring access of socially vulnerable groups to legal assistance.
It is within the framework of this logic that the solution to the issue of taxation of a number of public organizations providing free consulting and legal assistance is seen, said Arman Poghosyan.
From January 2025, turnover tax rates will be doubled in Armenia, with the possibility of deduction from documented expenses. As stated by the Ministry of Finance, for those who can document their expenses, the tax burden will not only not increase, but may even decrease.
For example, advocacy will be transferred to the general taxation system, including VAT at 20% and income tax at 18%. < Obviously, if the draft is adopted, the tax burden of lawyers will increase sharply, which will lead to a significant increase in the cost of legal services. After all, for this group of citizens, expenses are investments in knowledge and acquired experience. Then what kind of deduction can we talk about? On the contrary, raising the rate will inevitably lead to an increase in the cost of legal services, at least by 30-40%. As a result, access to legal assistance will be reduced, especially for people of average income and below, who will try not to seek legal assistance unless absolutely necessary, as is done today in the case of medical services," Tigran Keyan, a member of the Council of the Association of Small and Medium Entrepreneurs and tax expert, said earlier in a conversation with ArmInfo.
