At November 19 parliamentary hearings of the Standing Committee on Economic Affairs the debate of the legislative package on Making Addenda and Amendments to the RA Tax Code is at the core of the parliamentary hearings.
The NA deputies, representatives of the Staffs of the Prime Minister, Deputy Prime Ministers, the State Revenue Committee (SRC), the Ministries of Finance, High-Tech and Economy and the associations, companies of the Small and Medium Enterprises (SME) and the professional community participated in the hearings.
In his opening remarks, touching upon the necessity of holding hearings, the Deputy Chair of the Committee Babken Tunyan noted that at the phase of debate of the issue in the Committee there were proposals, observations by the deputies, and an agreement was reached that hearings will be before the Committee makes decisions, where they will also listen to the professional opinions on the sphere.
Presenting the substantiations of making amendments to the abovementioned legislative package, the RA Deputy Chair of Finance Armen Poghosyan noted that at this stage the policy of the Government is directed to the general taxation systems, the reduction of the circulation tax system and the scope of the micro-entrepreneurship application. According to him, its goal is the strengthening of the principles of taxation equality and justice. According to the Deputy Minister, 2 main problems were diagnosed. “Medical professionals or teachers performing their professional work pays 20 percent income tax from their salary, while, for example, an individual entrepreneur either pays no tax if they operate under the preferential conditions of micro-entrepreneurship taxation, or pays only 5 percent turnover tax. For example, the tax burden for the types of activities included in the building construction sector in the turnover tax system for 2023 is 2.4 times lower than the tax burden in the general taxation system, or the tax burden for the types of activities included in the legal and accounting activities sector in the turnover tax system for 2023 is 3.2 times lower than the tax burden in the general taxation system,” the Deputy Minister underscored.
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According to the rapporteur, the studies of the tax burden in the general taxation system of professional services and the turnover tax system presented in the draft show that the tax burden for economic entities operating in the turnover tax system is significantly lower than the tax burden in the general taxation system for almost all types of activities.
The draft proposes to move the taxation of a number of professional works and services to the general taxation system from July 1, 2025. These include: legal activities, accounting, head office activities, management consulting services, advertising activities and market situation research, construction of buildings, real estate transactions on a fee or contract basis, architectural or engineering activities, technical testing and analyses, other professional and technical activities, temporary labor activities, and health care.
“Some types of activities are not yet subject to the value added tax (VAT) system. These include veterinary services, social care services, and scientific research and development,” Arman Poghosyan said.
The Deputy Minister of Finance also answered the invitees’ numerous question, which particularly referred to the delay in the entry into force of the law, the risk of shadow activity, and how many entities the draft law will apply to, etc.
RA NA
