On December 4, Acting Deputy Minister of Finance Arman Poghosyan held a press conference on the key directions of proposed amendments to the tax system.
According to Arman Poghosyan, profits in Armenia's economy are mainly focused in non-exporting sectors. “The main objectives of the proposed changes in the tax system are to promote the investment attractiveness of the national economy, the level of economic activity, the effective reallocation of public revenues and fiscal sustainability”, - he said.
Acting Deputy Minister also presented the principles of the amendments: neutrality in terms of impact on 2019 state budget, reduction of direct tax burden, increase of tax burden on consumption and property taxes, simplification of tax system, fairness, and balanced implementation of changes.
The key amendments proposed to the tax system are as follows:
- from January 1, 2020, to substantially simplify small entrepreneurship taxation system,
- to leave the turnover tax threshold unchanged - AMD 115 million,
- to eliminate patent tax system,
- to make a transition to a single income tax rate,
- to reduce profit tax rate and set at 18 percent,
- to set 5 percent of dividend tax rate instead of 10 percent,
- to increase the excise tax rates for cigarette and alcoholic beverages in order to compensate for the loss of state budget revenue as a result of reducing the tax burden on profit tax and income tax; to expand the scope of goods subject to excise tax,
- to revise nature protection tax rate for environmental emissions from vehicles with 300 and more horsepower and with more than 5 years of issuance,
- to revise taxation approaches for organizing gambling games, totalizators: to tax totalizators, gambling games and internet gamblig games with profit tax, considering the final financial result as a tax base,to exempt from VAT and to tax the winnings received through totalizators with income tax,
- to introduce a lottery ticket registration system.
“The reforms should not hurt Armenia's fiscal sustainability. As a result of these changes, additional tax revenues are not expected, but there will also be no fiscal losses”, - said Acting Deputy Minister Arman Poghosyan.