Armenia, most likely, will move to a flat scale of income taxation from January 1, 2020
Armenia, most likely, will move to a single, flat, scale of taxation of incomes from January 1, 2020, instead of the previously announced September 1, 2019th. It is about reducing the profits tax to 23% regardless of the amount of income.
Deputy Finance Minister of Armenia Arman Poghosyan told ArmInfo correspondent that if everything goes according to plan and the draft amendments will be approved at the upcoming Cabinet meeting, and later approved by the legislature, then, according to the rules, the new regulation may come into effect from October 2019, however doing this in the last quarter of the year is impractical. Thus, as explained by the representative of the Ministry of Finance, the legislative norm will come into force from the beginning of 2020 simultaneously with the introduction of new excise tax rates and the expansion of the list of excisable goods.
Currently, Armenia has the following taxation scale: those who receive a monthly income of up to 150 thousand drams pay 23%, from 150 thousand to 2 million drams - 28%, and more than 2 million drams - 36%. The draft amendment "On Amendments and Additions to the Tax Code of the Republic of Armenia", submitted by the Ministry of Finance of Armenia on the single portal of legal acts e-draft.am in November 2018, from July 1, 2019 envisaged the transition to a flat scale of personal income taxation of 23% regardless of salary. The revised project has established a new transition time - September 1, 2019.
As previously reported, according to official estimates, due to the transition to new adjustments, state treasury losses may reach 27 billion drams, but can be offset by a decrease in shadow and an increase in economic and investment activity in the country. Most likely, the dates for the gradual reduction of the flat income tax rate to 20% over 5 years will be postponed for a year. Accordingly, the dates for the gradual return to the previous conditions of the mandatory funded pension system (MFPS) will be revised. Earlier it was planned that from January 2020 the monthly obligatory payments on them by the working citizen would be 3.5% (from 6.5% with state co-financing), from 2021 - 4.5%, and from 2022 - all 5%, instead of 2.5% of the salary and 7.5% of the state treasury established from July 1, 2018. Thus, Armenia will approach the initial adjustments on MFPS by 2023.