Armenian Government Mulls More Tax Reforms

Less than one year after introducing wide-ranging tax cuts, Armenia’s government announced on Tuesday plans for further tax reforms which Prime Minister Nikol Pashinian said will involve “bold” measures.

Finance Minister Atom Janjughazian presented a strategy of such reforms at a meeting of fellow cabinet members and other senior officials chaired by Pashinian. They will improve tax collection, create “favorable conditions” for continued economic growth and help to boost living standards in the country, he said, according to a government statement on the meeting.

“We are going to make very bold decisions ranging from property tax to other changes in taxation,” the statement quoted Pashinian as saying. “The logic behind those bold decisions is that state revenues must rise in a way that will allow the economy to develop so that they rise further in the future.”

“People must change the attitudes towards payment of taxes existing in modern-day Armenia,” Pashinian went on. For that purpose, he said, Armenians must be certain that “the government does not steal from them” and spends taxpayers’ money efficiently.

The statement gave no details of the measures cited by Pashinian or the reform “concept” proposed by Janjughazian.

The government pushed through the Armenian parliament last June a bill that introduced a flat personal income tax, cut the corporate profit tax rate from 20 to 18 percent and made more small businesses eligible for preferential taxation. At the same time, it raised excise taxes collected from tobacco and alcohol.

Government officials have expressed confidence that despite these tax cuts, which took effect on January 1, Armenia’s tax revenues will continue to rise significantly this year.

The State Revenue Committee (SRC) collected just over 1.5 trillion drams ($3.2 billion) in various taxes last year, up by more than 16 percent from 2018. The head of the SRC, Davit Ananian, has attributed the sizable increase to the SRC’s continued efforts to improve tax administration and combat tax evasion.