Armenian premier unveils details of new tax reforms
03.11.2011,
20:54
Armenian Prime Minister Tigran Sargsyan, speaking Wednesday at a session of the Small and Medium Size Enterprise Development Council, unveiled details of new tax reforms.
YEREVAN, November 3. /ARKA/. Armenian Prime Minister Tigran Sargsyan, speaking Wednesday at a session of the Small and Medium Size Enterprise Development Council, unveiled details of new tax reforms. He said that the aim of the legislative package is to improve business environment for small and mid-scale businesses and shift tax burden to high-income areas. The premier said that the income tax scale will be based on a progressive principle.
“It means the upper benchmark, which stood at 20% before that, will be moved up,” he said. “Today we have 10- and 20-percent benchmarks, and we also set 25% for those individuals who have AMD 2-million and higher income.”
Sargsyan pointed out another change that applied to heavy drinks. These legislative changes are aimed at setting equal taxation conditions for manufacturers and importers, since they ought to act at the heavy drinks market in accordance with international norms.
He said that other approach might lead to a similar situation in partner countries.
The prime minister said that amid the crisis in Armenia priority was given to domestic manufacturers.
“Time has come to return to equal conditions, and we are doing it,” he said. “But at the same time, we are raising taxes on elite drinks. In particular, we are increasing cost rate for vodka by 50% leaving the lower benchmark unchanged, at AMD 500. It means that if cheap vodka occupies 80% of our market, and elite vodka 20%, the increased rates will result in a certain price hike in the elite vodka market. But this will have no adverse impacts on our market.”
He said that Armenian manufacturers, especially small and medium, would take advantage of these changes.
“And from expensive vodka we’ll collect extra AMD 2 billion for our budget.”
Sargsyan also said luxury tax would be instituted.
“We raise rates on expensive cars for the first time. Customs duty on cars which cost more than $90,000 is raised by 20%,” he said.
The premier also said that payments for starting gambling businesses and lotteries are raised by 50%. They will bring additional AMD 2 billion to the government budget.
“We view expansion of the list of activities subject to licensing as an important step for small and medium businesses, such as catering and hotel businesses, transportation of passengers, hairdressing, car parking and billiard businesses,” Sargsyan said.
Sargsyan also presented steps to be taken to simplify tax administration for small- and mid-scale businesses and to tighten sanctions for large businesses.
In particular, to improve business environment for small businesses it was decided to raise the income benchmark from AMD 100,000 to AMD 10 million to make it possible to submit financial reports without inspections and advance coordination with the government-affiliated State Revenue Committee.
“We ease requirements to small businesses, but instead tighten grip upon large businesses, particularly large importers who fail to submit necessary reports,” Sargsyan said. “Therefore appropriate levers will be given to the State Revenue Committee.”
Exporters of ferrous and nonferrous metals as well as wood exporters will be obliged to pay.
The prime minister said that there is also one change for banks. This change relates to capital asset reassessment.
“Unlike the real sector, banks enjoyed a preference to reassess own capital assets, and this preference impacted baseline profit tax assessment,” he said. “Now we strip banks of this preference and oblige them to use private specialized agencies' services.”
Sanctions for cargo transportation without appropriate papers will be toughened.
“It, first of all, applies to large taxpayers whose turnover exceeds AMD 15 million,” Sargsyan said. “Punishment for breaching rules of usage of cash registers will be stricter than before.” ($1 – AMD 378.94) -0-
“It means the upper benchmark, which stood at 20% before that, will be moved up,” he said. “Today we have 10- and 20-percent benchmarks, and we also set 25% for those individuals who have AMD 2-million and higher income.”
Sargsyan pointed out another change that applied to heavy drinks. These legislative changes are aimed at setting equal taxation conditions for manufacturers and importers, since they ought to act at the heavy drinks market in accordance with international norms.
He said that other approach might lead to a similar situation in partner countries.
The prime minister said that amid the crisis in Armenia priority was given to domestic manufacturers.
“Time has come to return to equal conditions, and we are doing it,” he said. “But at the same time, we are raising taxes on elite drinks. In particular, we are increasing cost rate for vodka by 50% leaving the lower benchmark unchanged, at AMD 500. It means that if cheap vodka occupies 80% of our market, and elite vodka 20%, the increased rates will result in a certain price hike in the elite vodka market. But this will have no adverse impacts on our market.”
He said that Armenian manufacturers, especially small and medium, would take advantage of these changes.
“And from expensive vodka we’ll collect extra AMD 2 billion for our budget.”
Sargsyan also said luxury tax would be instituted.
“We raise rates on expensive cars for the first time. Customs duty on cars which cost more than $90,000 is raised by 20%,” he said.
The premier also said that payments for starting gambling businesses and lotteries are raised by 50%. They will bring additional AMD 2 billion to the government budget.
“We view expansion of the list of activities subject to licensing as an important step for small and medium businesses, such as catering and hotel businesses, transportation of passengers, hairdressing, car parking and billiard businesses,” Sargsyan said.
Sargsyan also presented steps to be taken to simplify tax administration for small- and mid-scale businesses and to tighten sanctions for large businesses.
In particular, to improve business environment for small businesses it was decided to raise the income benchmark from AMD 100,000 to AMD 10 million to make it possible to submit financial reports without inspections and advance coordination with the government-affiliated State Revenue Committee.
“We ease requirements to small businesses, but instead tighten grip upon large businesses, particularly large importers who fail to submit necessary reports,” Sargsyan said. “Therefore appropriate levers will be given to the State Revenue Committee.”
Exporters of ferrous and nonferrous metals as well as wood exporters will be obliged to pay.
The prime minister said that there is also one change for banks. This change relates to capital asset reassessment.
“Unlike the real sector, banks enjoyed a preference to reassess own capital assets, and this preference impacted baseline profit tax assessment,” he said. “Now we strip banks of this preference and oblige them to use private specialized agencies' services.”
Sanctions for cargo transportation without appropriate papers will be toughened.
“It, first of all, applies to large taxpayers whose turnover exceeds AMD 15 million,” Sargsyan said. “Punishment for breaching rules of usage of cash registers will be stricter than before.” ($1 – AMD 378.94) -0-
