“It is recommended to reduce the range of economic entities operating in the micro-enterprise taxation system as much as possible, thereby making this preferential taxation system even more targeted,” the RA Minister of Finance Arman Poghosyan said, presenting the package of draft laws on Making Amendments and Addenda to the RA Tax Code and on Amending the Law on Temporary Disability and Maternity Benefits.
According to Arman Poghosyan, during the practical application of the tax regulations set for micro-entrepreneurship, it was found out that the system is used not only by small economic entities that provide services to the population, perform work for the population and supply goods, but also those economic entities that receive income from other economic entities. The key rapporteur noted that this artificial expansion of the scope of the micro- entrepreneurship system is also facilitated by the fact that not only entrepreneurial incomes, but also passive incomes are exempted from taxation within the framework of this taxation system, and the income tax from the salary paid to individuals is calculated in the amount of only 5 thousand AMD per month, regardless of the amount of a salary paid.
The Government proposes to form equal and fair rules for the taxation of the income from salaries. Micro-enterprise entities will calculate income tax for their employees according to the rules set for other employees operating in the systems.
It was also proposed to establish that those receiving passive income cannot be in the preferential system of taxation of micro-enterprises.
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At the request of the Deputy Chair of the Standing Committee on Economic Affairs Babken Tunyan, Arman Poghosyan presented the statistics in the system. About 50.000 micro-enterprise entities have about 35.000 employees. He emphasized that new duties will not be established for people engaged in primitive activities.
The Committee members referred to the risk factors of the initiative, it was noted that instead of paying 20% income tax, employees can become independent business units. Arman Poghosyan, informing that there are indeed risk factors, however, noted there are also counterbalancing, restraining circumstances.
“We want the system to be addressed, a system that solves the problems set before it,” the Deputy Minister of Finance said.
The package of draft laws debated at the regular sitting of the Standing Committee on Economic Affairs held on November 23 was endorsed.
National Assembly of the Republic of Armenia
