ArmInfo. Armenia has taken steps to address the taxation of dividends received by shareholders of commercial banks. At its session on May20th, the National Assembly's Standing Committee on Economic Affairs approved amendments to the Tax Code and the Law "On State Duty."
Presenting the amendments, Deputy Minister of Finance Arman Poghosyan noted that the vast majority of financial operations and transactions carried out by banks are currently exempt from VAT, which is an internationally recognized approach. In tax matters, various countries compensate for VAT through other measures. One such measure is increasing the tax rate on dividends for bank shareholders. Arman Poghosyan emphasized that Armenia's banking sector, although also exempt from VAT, has demonstrated high profitability in recent years and therefore requires additional taxation. When developing the amendment package, the primary focus was on eliminating any pressure on the banks themselves, which could lead to higher interest rates, higher service costs, and the emergence of inflation risks. Therefore, regulators opted for a mechanism that increases the tax rate for commercial bank shareholders. The amendments stipulate that if dividends are paid to bank shareholders, these transactions will be subject to a 15% income tax rate, rather than the current 5%, regardless of whether the beneficiary is an individual or a legal entity.
However, at the same time, banks will be granted certain benefits. If a bank's shares are listed on organized stock markets (exchanges), the tax rate on dividends from listed shares will remain at the same 5%. Currently, as the deputy minister noted, work is underway to refine the list of stock exchanges. According to independent experts, this measure could also limit the number of "pocket banks" with one or a group of affiliated shareholders and encourage banks to enter organized stock exchanges.
