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Government Plans Easier Tax Rules For Small Business


Armenia - A small shoe store in Yerevan.
Armenia - A small shoe store in Yerevan.
The Armenian government announced on Thursday a major simplification of its taxation procedures for small businesses, which Prime Minister Tigran Sarkisian said will further improve the country’s investment climate.

The government approved a package of fresh amendments to Armenian tax legislation that were drafted by the Ministry of Finance.

“This package contains numerous provisions awaited by business,” Sarkisian said during the cabinet meeting. “Some of them have been quite long-awaited.”

The premier singled out provisions relating to small firms with annual turnovers of up to 58.3 million drams ($144,000). One of the proposed amendments would reduce from 16 to 4 the number of financial reports they have submit to the tax authorities each year.

Those businesses would also have the option of having their profit taxes calculated on the basis of their turnover, rather than earnings, as is the case now. Their overall tax burden, which is considerably lower than that of larger firms, would hardly change as a result, however.

Sarkisian said that the “radical changes,” which will be debated by the Armenian parliament early next month, are part of his government’s continuing efforts to improve the domestic business environment. “The emphasis is being put on creating more favorable conditions for small and medium-sized businesses,” he added.

In an annual global survey released last month, the World Bank reported a further improvement of regulatory and other conditions for doing business in Armenia. In particular, the Doing Business survey noted progress in the Armenian authorities’ ongoing efforts to make taxation less cumbersome and arbitrary.

It said the authorities have slashed by more than half, to 13, the number of annual payments for corporate income, property, and land taxes as well as social security contributions. Local businesses typically had to make 50 such payments in 2010.

Still, Armenia ranked only 108th, out of 184 economies surveyed, in terms of the quality of tax administration.
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