The National Assembly began on Wednesday a final debate on Armenia’s controversial Tax Code which has been amended by the government after being strongly criticized by opposition lawmakers and business associations.
The government-drafted code passed by the parliament in the first reading in June will replace all other Armenian tax laws. It is supposed to streamline taxation procedures and complicate tax evasion in the country.
The initial version of the nearly 800-page legislation called for higher taxes on fuel, alcohol and tobacco and a lower income ceiling for small businesses paying a single “turnover tax.”
These provisions were criticized not only by opposition but also some pro-government lawmakers. Several Armenian business associations added their voice to the criticism, saying that higher taxes would seriously hurt many businesses.
By contrast, the International Monetary Fund defended the new tax rates sought by the government.
Nevertheless, the government amended the code later in the summer in an effort to address concerns voiced by the opposition and business leaders. Eduard Sharmazanov, a deputy parliament speaker affiliated with the ruling Republican Party of Armenia, hailed the changes as “tremendous and fundamental.”
“This is the result of joint efforts by all of us as well as the business community and non-governmental organizations,” Sharmazanov said during Monday’s debate on the parliament floor.
The proposed amendments to the draft code failed to satisfy the parliamentary opposition, however. One of the opposition deputies, Khachatur Kokobelian, said the government simply turned the code from “worst to bad.”
Another opposition lawmaker, Hrant Bagratian, accused the government of “neglecting” key opposition proposals. “I am deeply convinced that for countries at our level of development with GDP per capita of $3,000-$4,000, the average corporate profit and personal income tax rates must be the same,” said the former prime minister.
Another parliamentarian, Tevan Poghosian, demanded government guarantees that Armenia’s tax legislation will not undergo major changes for the next 10 years. He said such “stability” is essential for Armenian entrepreneurs.