Law on change in Armenian tax code

Law on change in Armenian tax code

Posted by: Tower International Consultants
Category: Legislation Updates
Payroll Services in Armenia

The new law on changes in Armenian Tax Code after getting the approval from RA Government passed to RA National Assembly for approval. The main objectives of the project package are to make changes to the national tax burden and investment redistribution, as well as ongoing simplification of the micro-enterprise taxation system. In this short summary we offer You to get acquainted with the most important changes.

The rates of income tax in Armenia are going to reduce. Starting from September 1, 2019, the income tax for salaries will be 23 %. It is very important to note that the taxation of income will not be progressive anymore, and no matter how much income the person has the income will be taxed at 23%. Accordingly, starting from January 1, 2020, the income tax rate will reduce to 22%, from January 1, 2021 to 21%, from January 1, 2022 to 20.5 % and from January 1, 2023 to 20%.

At the same time, it is proposed to equalize the state budget and participation of citizens in terms of cumulative pension contributions along with the reduction of the income tax rates and the tax burden on natural persons.

It is proposed to reduce the profit tax rate from 20% to 18%, starting from 2020 reporting year. The package also identifies a small business taxation system from January 1, 2020. In particular, it is proposed to introduce a unified, micro-enterprise taxation system instead of the taxation system and the family entrepreneurship system of self-employed persons, by establishing that legal entities and individual entrepreneurs can benefit from this taxation system, as well as individuals who are not sole proprietor if the annual sales turnover does not exceed 24 million drams.

The threshold for turnover tax should rise from AMD 58.35 million per annum to AMD 115 million per annum, which means that all the entrepreneurial activities, who’s annual turnover does not exceed AMD 115 million can be turnover tax payers.

The excise stamps rates have been changed for the following general types of products: Alcohol products, Tobacco products, Petrol, Diesel and Gas.

The procedure for accounting and control over income received from the organization of lottery activities shall be established by the Government

The package of projects also sets out the types of activities that can be carried out by natural persons not a sole proprietor of micro entrepreneurship. These include the production of footwear and leather apparel and similar products, shoes and leather accessories, repair of shoes and leather goods, clothing production and renovation, hats production and repair, production and repair of carpets and carpet products, wooden furniture, furniture and home furnishings, production and repair of non-precious jewelry, computer equipment, TV sets, washing machines, air conditioners and other household appliances, software maintenance, etc.

Prepared by Tigran Danielyan