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Armenia, most likely, will move to a flat scale of income taxation from January 1, 2020

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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 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. 


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