YEREVAN, January 9. /ARKA/. Armenia’s citizens with a monthly salary of up to 150 thousand drams (the equivalent of about $310) would suffer most from a string of proposed tax changes, the head of the Association of Accountants of Small and Medium Business Vahagn Hambartsumyan said at a press conference on Wednesday.
According to the proposed changes, which still have to go through the parliament, Armenia will shift to a single averaged payroll tax rate of 23%, after which it is to gradually drop to 20% by 2023. Concurrently the proposed changes would bring back the parity payments of 5% to the funded system by employers and the government. The changes also call for cutting income tax rate by 2% to 18%, while the rate on dividends received in Armenia by non-resident companies is to be cut from 10% to 5%.
According to Hambartsumyan, the reduction of income and payroll taxes will encourage entrepreneurs to declare their income in full. In response to reduction of its revenue, the government will raise excise taxes on certain goods such as alcohol and tobacco. Consequently, the consumers will pay more for goods due to increased excise taxes, according to Hambartsumyan.
According to him, the changes if approved by the parliament, will not affect people with monthly salaries of up to 150 thousand drams because in fact their payroll tax will remain at the current level of 23%. He also added that the government’s statement that tax cuts would lead to higher wages is somewhat inaccurate and does not apply to small and medium businesses. -0-