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Armenian Government Vows Tax Cuts


Armenia - Prime Minister Nikol Pashinian visits a tech company based at the newly built Engineering City in Yerevan, 22 August 2018.

The Armenian government has promised major tax cuts that will benefit most workers as well as some small businesses.

Prime Minister Nikol Pashinian said the government will initiate “very serious changes” in Armenia’s Tax Code in a Facebook video address aired late on Wednesday.“I can now say that we will opt for a simplification of the tax legislation and a reduction in personal income tax,” he said.

Pashinian declined to specify the extent of the new tax rates planned by the government, saying that “several scenarios” are still under consideration. He pledged to all but scrap the main tax levied some of the small businesses operating in the country.

Under Armenian law, companies with an annual turnover of up to 115 million drams ($237,000) are exempt from profit and value-added (VAT) taxes paid by larger businesses. They are only required to pay “turnover tax” equivalent to 2 percent of their revenue.

Pashinian promised to set a new and “symbolic” tax rate for small firms earning no more than 24 million drams annually. “In essence, that will mean the near absence of [turnover] tax,” he said.

Davit Ananian, the head of Armenia’s State Revenue Committee (SRC), was careful not to shed more light on the promised tax cuts when he spoke to reporters on Thursday. He said the government is still calculating “budgetary losses” that would result from lower taxes and is looking into ways of making up for them.

“In September the government will formulate a common position [on the issue] and inform the public,” Ananian said after a weekly cabinet meeting in Yerevan. The government hopes to push the amendments through the parliament before the end of this year, he said.

The Tax Code was already amended by Armenia’s previous government last year. The amendments raised from 26 percent to 28 percent the tax rate for monthly incomes ranging from 150,000 drams to 2 million drams ($310-$4,150). The rate for those who earn more was set at 36 percent. At the same time the tax rate for workers making up to 150,000 drams a month was cut from 24.4 percent to 23 percent.

Those changes, which took effect on January 1, met with strong resistance from opposition groups, notably Pashinian’s Yelk bloc. In February, the Armenian parliament voted down a Yelk bill that would repeal the higher tax rates.

But on April 12, Serzh Sarkisian’s government unexpectedly announced plans to lower income tax. The announcement came the day before Pashinian launched anti-government mass protests that eventually brought him to power.

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