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New amendments and supplements are planned to be introduced into the Armenian Tax Code that has entered into effect since January2018. The relevant decision was adopted at the cabinet session on June 11. 

Economist Atom Margaryan assessed positively the envisaged amendments in an interview with Panorama.am, saying those long-anticipated changes would have positive impact both on budget revenues and the economic developments of the country. 

“In general, the acting Tax Code is problematic both in terms of its content and nature. Actually, it was aimed at solving short-term issues seeking to increase budget returns, yet was not balanced over the medium and long term perspectives,” Atom Margaryan stressed. 

As the economist explained, the changes are aimed at increasing the budget revenues and curbing the black economy. “To me, provisions on economic amnesty and fines for non-registered employees are prudent decisions. Today, people work in the black economy as they enjoyed privileged conditions with a chance to avoid paying taxes, while the small businesses had no opportunities to enjoy those benefits and were forced to work in the shadow economy. Today, the government say to the major businesses there would be no privileges, at the same time conveys messages to the small and medium size businesses to leave the black economy since everyone is equal before the law.”

To Margaryan’s prediction, the amendments will bring benefits to many. He referred to the fact that in the service sector   certain percentage of employees are not registered. The unemployment rate in Armenia is officially at 17-18%, yet as he believed, 20-25% of the number is actually employed. 

Atom Margaryan stressed that increasing the levels of penalties for filing a false tax return will not solve the matter. Instead, he suggests applying moderate tax rates to encourage people to declare their incomes. 

“Overall, I asses positively the changes. In the context of separating the business from politics, we see the positive impact on the business itself as it is ‘liberated’.  There were people who wished to expand their business through affiliation with politics and officials, yet the situation is different today. The opportunities for competition have grown and the entrepreneurs are free to launch business projects through merely assessing economic and market risks,” Margaryan concluded.