Armenian government will return 56 billion drams VAT debit balance to business entities
The Government of Armenia will return the debit balance of VAT of 56 billion drams to business entities. The corresponding decision was made at a cabinet meeting on September 12.
Earlier, on September 7, Armenian Prime Minister Nikol Pashinyan announced that an unprecedented economic proposal was being discussed in the government. "Thousands of organizations have VAT debit balances that were formed before July 1, 2017. If you don't go into details, these are the amounts that the state owes to business entities under the VAT," he wrote on his Facebook page.
According to the prime minister, the proposal is unprecedented since the government is discussing the possibility of returning to the business entities a debit balance in the amount of about 56 billion drams. "The meaning of the proposal is that business entities that have long lost hope of getting these amounts back will invest them in the economy. This is, in fact, a state infusion of more than $ 100 million into the economy, which has no precedent in the history of our country'', Pashinyan explained.
According to the Chairman of the State Revenue Committee (SRC) of Armenia David Ananyan, who introduced the legislative initiative, a number of adjustments in this direction are proposed. "We all know that there are debit balances or so-called "overpayments" in the area of value added tax (VAT). After the new Tax Code entered into force, the difference between the old and the new debit balance was established. The new ones - after July 1, 2018 are returned to economic entities on the basis of their own statement in quarterly terms, and the old ones are sent exclusively to pay off upcoming VAT liabilities. With this decision, we eliminate the distinction between old and new receivables, which will be applied from the 1st November 2020, "he explained.
Moreover, as the head of the SRC pointed out, the very next day after the approval of the bill, taxpayers can apply for receiving overrpayments formed at that time. The following scheme will be applied: for business entities with debts of less than 5 million drams, VAT debit will be returned only on the basis of applications, without desk audits, for debts of 5 to 40 million drams, VAT funds will be returned in a simplified manner, based on the application of the economic entity and information available to the tax authority, and in case of exceeding the threshold of 40 million drams, the funds will be refunded after the documentary study and verification .
According to the head of the tax and customs committee, the matter concerns about 9 thousand business entities, 3 thousand of which are old debits, the state owed 56 billion 443 million drams. So, according to him, after making the decision, persons with a debt of up to 5 million drams will automatically receive their funds. "By the end of the year, we will return 50 billion drams from the indicated 56 billion drams," Ananyan said.
The head of the SRC reminded that as of January 2018, the tax authority owed 275 billion drams to business entities. Having resolved the situation with 50 billion drams, as the chief tax specialist pointed out, 72-75 billion drams remain for current obligations, which are formed and repaid. "I think by January 1, 2020 we will be able to declare that within two years we have reduced our debts to business entities by 220 billion drams, which is common for a strong state," he said.
"It turns out that we financed the economy in the amount of 220 billion drams," Prime Minister Nikol Pashinyan stated. In addition, as the head of government pointed out, business entities were not even hoping to receive these 56 billion drams. "This opportunity arose due to an increase in tax revenues," Pashinyan explained.