ArmInfo. The Armenian government intends to improve the investment environment by applying new tools to solve the problem of bad debts. The National Assembly of the Republic of Armenia is discussing amendments to the Tax Code in the second reading at the plenary session on January 20.
As the RA Minister of Economy Gevorg Papoyan noted in his speech, in order to solve this problem, the government proposes to increase the threshold of accounts receivable of organizations considered bad from 100 thousand drams to 300 thousand drams. The Minister noted that organizations often make mistakes when accounting for accounts receivable in income tax accounting. According to the current regulation, to determine the taxable base of a taxpayer, deductions for writing off bad debts are deducted from gross income. Accounts receivable, the total amount of which exceeds 100 thousand drams, are considered hopeless from the date of entry into force of the court decision on satisfaction or refusal to satisfy the claim for confiscation of the amount of accounts receivable.
Earlier, the Minister reported that according to official statistics, in 2022, the courts of general jurisdiction of Armenia accepted 172,476 civil cases for proceedings, of which 159,683 or 93% of all cases accepted concerned the confiscation of funds. Large business entities often have the resources to reduce legal costs, but the problem of accounts receivable reduces this opportunity. As a result of negotiations with audit companies, it becomes clear that, along with the income tax, large companies have problems with paying off bad debts. Small companies, on the contrary, do not have the resources to pay legal costs, which leads to an increase in cases related to the administration of cases related to bad debts. In this regard, a provision is being introduced into the Tax Code to increase the threshold of accounts receivable.
The Minister also noted that the current law entered into force on December 31, 2002 and has been in force for about 22 years. During the specified period, inflation was 113.74%, and thus, 100 thousand drams today already amount to 224 thousand drams.
