ArmInfo. Armenia has taken up the issue of changing the taxation of the country's commercial banks. At a meeting on April 30, the RA government approved amendments to the Tax Code and the Law "On State Duty."
Presenting the amendments, RA Deputy Minister of Finance Arman Poghosyan noted that currently, the vast majority of financial operations and transactions carried out by banks are exempt from VAT, which is an internationally recognized approach. Various countries around the world are taking a different approach, developing other structural solutions in lieu of VAT. For example, increasing the profit tax rate exclusively for the banking sector is common, but other solutions exist involving the application of special taxes, the most common of which are taxes on financial activities or taxes on financial transactions, again exclusively applicable to banks. Some countries have recently begun applying tax rates on resources that exceed normal profitability.
Arman Poghosyan added that the country's banking sector, exempt from VAT, has demonstrated high profitability in recent years, necessitating additional tax rules. This was done taking into account both international experience and the possibility of avoiding any pressure on banks, which could lead to higher interest rates, higher service costs, and the emergence of inflation risks. The amendments stipulate that if capital is withdrawn from banks in the form of dividend payments to shareholders, these transactions will be taxed at 15%, rather than the current 5%, regardless of the recipient's status-individual or legal entity. At the same time, the proposed package will provide banks with tax breaks on dividends from shares listed on publicly traded stock exchanges. In this case, the profit tax rate will not increase. Currently, as the Deputy Minister noted, work is underway to refine the list of these stock exchanges, especially given their wide geographic reach.
