New tax code could default Armenian economy
YEREVAN, June 23. /ARKA/. Tigran Jrbashyan, the president of the American Chamber of Commerce in Armenia (AmCham), has renewed his criticism of a new government-drafted tax legislation, adopted by the National Assembly of Armenia in the first reading earlier this month despite strong objections from the opposition and even the ranks of the ruling Republican Party of Armenia.
Speaking to reporters, Tigran Jrbashyan argued that if no fundamental changes are made to it, it could lead to a default of the Armenian economy.
The new Tax Code, if approved in the final reading, slated for autumn, would raise the income tax rates for workers earning 120,000 drams ($250) or more per month from 26 to 28 - 33 percent. Income tax rates for those who earn at least 2 million drams would be downed from 36 percent to 33 percent. Workers who earn less than 120,000 drams a month would have their income tax rates cut from 24.4 percent to 23 percent.
"The passage of the bill in the first reading has alarmed one-third of Armenian businesses. And although the bill is being discussed by a parliamentary commission on economic affairs now, the problem is that
the controversial legislation must be revised completely,” he said.
According to him, the country needs to develop at the expense of economic activity, rather than at the expense of simple increase in the amount of taxes to replenish the budget. At the same time, he noted that although the bill in its present form is unacceptable, it has several ‘successful’ provisions concerning collection of VAT, taxation at border, administration and reducing corruption risks.
"The new tax code implies consensus between businesses and government. If it is not achieved, the business will respond by migration from the country to where the atmosphere is more favorable. For example, beginning from January 1, 2017, Georgia will abolish income tax. This in mind, a number of Armenian IT companies announced their intention to move their business to Georgia," said Jrbashyan.
Jrbashyan expressed hope that the discussions of the new tax code would not lead to social protests of people who receive high salary, who would be affected by the proposed tax changes most.
"If the new tax code is not adopted by consensus, it would be better to throw it away," Jrbashyan concluded.-0-
Speaking to reporters, Tigran Jrbashyan argued that if no fundamental changes are made to it, it could lead to a default of the Armenian economy.
The new Tax Code, if approved in the final reading, slated for autumn, would raise the income tax rates for workers earning 120,000 drams ($250) or more per month from 26 to 28 - 33 percent. Income tax rates for those who earn at least 2 million drams would be downed from 36 percent to 33 percent. Workers who earn less than 120,000 drams a month would have their income tax rates cut from 24.4 percent to 23 percent.
"The passage of the bill in the first reading has alarmed one-third of Armenian businesses. And although the bill is being discussed by a parliamentary commission on economic affairs now, the problem is that
the controversial legislation must be revised completely,” he said.
According to him, the country needs to develop at the expense of economic activity, rather than at the expense of simple increase in the amount of taxes to replenish the budget. At the same time, he noted that although the bill in its present form is unacceptable, it has several ‘successful’ provisions concerning collection of VAT, taxation at border, administration and reducing corruption risks.
"The new tax code implies consensus between businesses and government. If it is not achieved, the business will respond by migration from the country to where the atmosphere is more favorable. For example, beginning from January 1, 2017, Georgia will abolish income tax. This in mind, a number of Armenian IT companies announced their intention to move their business to Georgia," said Jrbashyan.
Jrbashyan expressed hope that the discussions of the new tax code would not lead to social protests of people who receive high salary, who would be affected by the proposed tax changes most.
"If the new tax code is not adopted by consensus, it would be better to throw it away," Jrbashyan concluded.-0-