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Government To Seek Income Tax Cuts


By Atom Markarian

The Armenian government has decided to seek a further reduction in the rate of the tax on personal incomes of Armenian residents, Minister for State Revenues Yervand Zakharian announced on Friday.

Zakharian said the cabinet will soon ask the parliament to approve “serious changes” in the existing rates in a bid to curb income tax evasion which is believed to be widespread among employers.

“There are quite a lot of hidden revenues, especially in the trade and services sector,” he told a news conference, adding that the lower rates would discourage private businesses from underreporting their employees’ wages.

The maximum rate of income tax was slashed from 30 to 20 percent as part of a government package of tax cuts approved by the parliament in December 2000.

Zakharian declined to specify what the new rate will be under the government proposal. But officials in his ministry privately speak of the need to replicate Russia’s decision last year to introduce a 13 percent flat tax.

The tax authorities are supposed to boost their revenues by one quarter this year. They say they hope to achieve the increase by tapping the huge shadow sector of the Armenian economy.

Zakharian said they, in particular, will soon require all traders in the country’s numerous retail markets to register with and submit regular income declarations to local tax collection branches. He said his agency will also impose tighter controls on the manufacturers and importers of basic food products and alcohol.
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