ArmInfo. Armenia has taken up the issue of changing the taxation of dividends received by shareholders of commercial banks. The National Assembly of the Republic of Armenia is discussing amendments to the Tax Code and the Law "On State Duty" at its June 17 session.
Presenting the amendments, Deputy Minister of Finance of the Republic of Armenia 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 accepted approach. In tax matters, various countries compensate for VAT through other measures. One of these is an increase in the dividend tax rate for bank shareholders.
Arman Poghosyan emphasized that Armenia's banking sector, while 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 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, banks will also 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 current 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 more affiliated shareholders and encourage banks to list on organized exchanges.
