Pashinyan presents two options of reforming income taxation
06.09.2018,
17:10
In a live Facebook broadcast today Armenia’s Prime Minister Nikol Pashinyan unveiled two possible options of how income taxation system can be reformed and also promised that income tax rate would be declining annually.
YEREVAN, September 6. /ARKA/. In a live Facebook broadcast today Armenia’s Prime Minister Nikol Pashinyan unveiled two possible options of how income taxation system can be reformed and also promised that income tax rate would be declining annually.
Pashinyan said under the current three-tier income tax system those who earn up to 150,000 drams a month pay 23% income tax, those who earn from 150,000 to 2 million drams pay 25% and those few who earn more than 2 million, pay 36% tax.
Pashinyan said he is an advocate of a two-tier system. He said under the two-tier system those who earn up to 250,000 drams a month would pay 23% income tax, while those who earn more than 250,000 drams would pay 25% income tax.
According to the prime minister, the two-tier tax system is based on social justice; those who earn more, pay more, but on the other hand, it makes employers unwilling to raise personnel salaries, because they would have to pay more taxes.
He also noted that income tax in Armenia is higher than profit tax. And it turns out that the money the employer pays as a salary, can be registered as a profit in reporting. In such a case the employer would pay only 20% tax.
The second option is the so-called flat tax that equals profit and income taxes, setting them for example, at 23%. Pashinyan said that the tax on dividends is proposed to equalize for citizens and non-citizens of Armenia. Now for the first it is 5%, for the second - 10%.
He said according to estimates, citizens would receive additionally 38.5 billion drams as a result of the proposed changes, which could be channeled into small and medium-sized businesses, banks, which would in turn reduce the interest rate on agricultural loans.
Pashinyan said he is in favor of reducing the tax rate annually by 0.5%, so that in five years the income tax rate should drop to 20%.
According to the Prime Minister, this would give the economy an additional development impetus. He said the government is ready to listen to other proposals and ideas of all interested parties.
"We selected the presented options from 10-15 possible scenarios, but my assistants, I and government members are ready to listen to suggestions and consider other options as well," concluded Pashinyan. -0-
Pashinyan said under the current three-tier income tax system those who earn up to 150,000 drams a month pay 23% income tax, those who earn from 150,000 to 2 million drams pay 25% and those few who earn more than 2 million, pay 36% tax.
Pashinyan said he is an advocate of a two-tier system. He said under the two-tier system those who earn up to 250,000 drams a month would pay 23% income tax, while those who earn more than 250,000 drams would pay 25% income tax.
According to the prime minister, the two-tier tax system is based on social justice; those who earn more, pay more, but on the other hand, it makes employers unwilling to raise personnel salaries, because they would have to pay more taxes.
He also noted that income tax in Armenia is higher than profit tax. And it turns out that the money the employer pays as a salary, can be registered as a profit in reporting. In such a case the employer would pay only 20% tax.
The second option is the so-called flat tax that equals profit and income taxes, setting them for example, at 23%. Pashinyan said that the tax on dividends is proposed to equalize for citizens and non-citizens of Armenia. Now for the first it is 5%, for the second - 10%.
He said according to estimates, citizens would receive additionally 38.5 billion drams as a result of the proposed changes, which could be channeled into small and medium-sized businesses, banks, which would in turn reduce the interest rate on agricultural loans.
Pashinyan said he is in favor of reducing the tax rate annually by 0.5%, so that in five years the income tax rate should drop to 20%.
According to the Prime Minister, this would give the economy an additional development impetus. He said the government is ready to listen to other proposals and ideas of all interested parties.
"We selected the presented options from 10-15 possible scenarios, but my assistants, I and government members are ready to listen to suggestions and consider other options as well," concluded Pashinyan. -0-
