ArmInfo. The Armenian authorities and those who developed the amendments to the turnover tax system are detached from reality. And the so-called provided to representatives of the trade sector is another distortion of the idea in the form of turnover tax. This was stated by a participant in the protest in front of the building Siranush Gevorgyan to journalists on March 3., - she pointed out.
According to her, the RA authorities, by claiming that they are allegedly providing a transition period for representatives of trade activities to adapt to the new tax conditions, are once again misleading the public. The so-called state support program for a number of SMEs is chaotic and requires unnecessary paperwork, she believes.
Anush Nurijanyan, in turn, notes that the state program proposed recently only applies to those entrepreneurs who, as of January 1, 2025, managed to conduct an inventory of their inventory balances and submit a list to the tax authority. Meanwhile, our fight is against inventory, she notes. In addition, those who do not have tax arrears will be able to use it. , she asks.
SME representatives call on the country's financial authorities to be sincere and directly state that, yes, the revision of the turnover tax system implies an increase in the tax burden - only because they themselves admitted in the draft amendments that the new rules will provide the state treasury with an additional 18-20 billion drams in taxes. If they really want to create the necessary conditions for businesses to abandon the simplified system and move into the VAT regulation field, let them say so directly, they note.
The 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 a non-taxable annual turnover of up to 115 million drams). In June 2024, amendments to the Tax Code were adopted, which entered into force at the beginning of this year, implying an almost double increase in the turnover tax rate, with the possibility of reducing the tax payable due to documented expenses. In particular, for entrepreneurs in the field of trade activities, within the framework of the initiative, a rate of 10% of income was established (instead of the previous 5%) with the possibility of deducting 9.5% of expenses, but not less than 1.0% of turnover (against the previous 4% of documented expenses, but not less than 1.5% of turnover). As noted in the draft decision, as a result, 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.
On February 27, the Cabinet adopted a program to support SMEs. The program, as experts admit, is quite complicated and requires special knowledge.
In particular, as Finance Minister Vahe Hovhannisyan stated while presenting the draft decision at a Cabinet meeting, the problem is that many representatives of the purchase and sale activities had a large inventory balance as of January 1, 2025, which they will not be able to properly document and, accordingly, take advantage of the tax deduction opportunity. In this regard, the government decided to give businesses (payers of turnover tax) the opportunity to sell goods purchased earlier, within 6 months of the current year, under the previous tax rules. If the purchase can be confirmed with documentation, then the business will be able to take advantage of the 9.5% deduction opportunity. After this period, the business will have to operate exclusively under the new tax regulations, the minister noted. In this regard, he called on small businesses to purchase goods exclusively with documents, otherwise they will be forced to pay a 10% tax on their sale. The Minister also recalled that the range of expenses from which write-offs can be obtained has expanded: these are not only expenses on the purchase of goods, but also the payment of utilities, rent, salaries and other current expenses.
The support is provided to the taxpayer subject to the simultaneous fulfillment of the following conditions: the taxpayer carried out commercial activities in 2024, as of December 31, 2024 and in the reporting quarters for receiving support, the taxpayer was a payer of turnover tax only, and as of the day preceding the date of filing the application, the turnover tax obligations payable were fulfilled in full. In addition, at the end of the quarter, the amount of turnover tax paid by the taxpayer for commercial activities must exceed 5% of the sales turnover generated by this activity, or the taxpayer has an undeducted and carried- over amount of turnover tax on expenses incurred in previous quarters. Information on the balances of goods from commercial activities must be submitted to the tax authority as of January 1, 2025. Support will be provided under the program for the first and second quarters of 2025.
The Minister of Finance also presented the volumes of support provided within the framework of the program. .
