ARMINFO news agency in Armenia
On June 8, the Minister of Finance of the Republic of Armenia Atom Janjughazyan announced on June 8 at the joint sitting of the Economic Committees of the National Assembly of the Republic of Armenia during the discussion of the preliminary report on the implementation of the country's 2019 state budget.
According to him, the Armenian economy should become high-tech, aimed at the development of industry and the ecosystem. A model of more accelerated growth of economic potential was chosen, which does the scale of the country dictate. In this context, it is envisaged to implement a number of programs, one of which is related to tax policy. The government also announced its intention to significantly reduce the shadow economy and create a competitive business environment. To achieve this goal, measures are being taken that should contribute to the growth of investment attractiveness and reduce the tax burden, setting the goal of increasing the growth potential of GDP. The minister also recalled the project to introduce a "wealth" tax program. In circulation is a reform project for real estate tax, according to which the assessment of its real value will be carried out at market rather than cadastral value.
At the same time, he did not rule out that the implementation of all these measures could lead to risks associated with tax revenues. For this reason, it is important that the implementation of these measures does not lead to a deterioration of the social component and security. For this reason, as Janjughazyan noted, it is extremely important to pursue a balanced policy. In the long term, all these measures will lead to positive results, but complications are possible in the short term. In order to avoid negative consequences in the second scenario, it is very important to develop a system of indirect taxes to compensate for the losses associated with a decrease in direct taxes. He recalled that from January 1, 2023, a single income tax rate will be applied in Armenia, which will be 20% instead of the current 23%.
At the same time, income tax from 20% was reduced to 18%. Dividend tax reduced to 5%. The minister also said that excise tax rates would be reviewed annually. Atom Janjughazyan also emphasized the need to improve tax policy transparency. According to him, there are various modes that often lead to problems. For this reason, it is very important that the system becomes as transparent as possible and that taxpayers become more demanding. This measure will lead to a decrease in the level of the shadow economy. The main goal of all these measures, as Atom Janjughazyan noted, is the voluntary nature of tax payments.
The Minister also said that as part of the reforms of the public administration system, measures are being taken in 14 directions and 27 components, one of which concerns tax policy, which should correspond to the priorities of economic development. For this, it is necessary to assess the needs of the business entity in its expectations from the state budget and find a balanced formula so that the entity does not suffer and the budget is replenished. It is also important to evaluate the effectiveness of tax expenditures, their impact on targeted programs, as well as improving the effectiveness of tax administration. Of the five tax regimes, the minister noted, only three are currently used.