ArmInfo. The Armenian authorities have decided to postpone the 20% taxation of the income tax refund used to pay off mortgage loans. This was announced by Finance Minister Vahe Hovhannisyan at a final press conference on December 25.
A working document of the Finance Ministry was previously published, according to which this possibility is being discussed. The draft law noted that the initiative is intended to restore social justice, since in practice it turned out that the refund system is used mainly by citizens receiving high salaries. As a result, they actually do not pay income tax or pay only a small part of it, while people with a relatively low income pay the full 20% tax, since they are not beneficiaries of the system. And with the adoption of amendments to the law, highly paid users of the system will begin to pay at least part of the income tax to the state.
According to the minister, the document was not even put into circulation, but was only sent to government agencies for feedback. This was done in order to understand how effectively and specifically various types of preferences function.
In general, Hovhannisyan pointed out, the return of income tax used to pay off mortgage loans makes the tax system regressive. And it turns out that people with a higher income level use the benefits more. In this context, the Ministry of Finance decided to consider the issue from a different perspective - as additional income, thereby reducing the costs of the income tax refund system in a certain way. , he noted.
However, after discussing the initiative with colleagues, the Ministry of Finance decided to hold off on it. , the head of the Ministry of Finance summarized.
The program has been in effect since November 2014: citizens who purchase housing on the primary market with a mortgage loan (apartments in new buildings or new private houses) receive a refund of income tax in the amount of mortgage interest. If in 2015, 273 million drams were allocated for the refund of income tax, then in 2022 the number of beneficiaries was 29,199, and the refunded amount was 36.5 billion drams, in 2023, 51.9 billion drams were refunded to 38,911 beneficiaries of the program.
In total, during 2015-2023, 141.1 billion drams were refunded from the state budget to citizens who took advantage of the income tax refund program. This year, the refunded amount is expected to be about 72 billion drams.
Back in 2017, the Armenian financial authorities stated that the legal norm was intended to create stable and solvent demand in the sector, as well as to solve social problems. As a result, the authorities began to introduce various restrictions. However, after discussing the initiative with colleagues, the Finance Ministry decided to hold off on it. , - the head of the Finance Ministry summarized.
From July 1, 2022, the gradual abolition of the income tax refund system for mortgage loans began in Yerevan. The process started in the center of the capital and will be completed by 2025. At the beginning of this year, the Armenian government proposed to reduce the maximum amount of income tax that the state returns to the - no more than 750 thousand within one transaction, instead of the current 1.5 million drams (per quarter), for mortgage transactions from January 1, 2025.
In addition, the Armenian authorities want to completely abolish the income tax refund for mortgage loans from 2029. The abolition will be gradual. Thus, after January 1, 2027, income tax on mortgage loans in the primary market is not refunded if the property is located in the regions adjacent to the city of Yerevan - Aragatsotn, Ararat, Armavir and Kotayk. From January 1, 2029, tax refunds will no longer apply to other regions. The restrictions will not apply to border settlements
