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Armenia To Simplify Taxes For Businesses

By Lorys Charalambous,, Cyprus

18 December 2012

Armenia's National Assembly has been considering a package of tax revisions for businesses, including simplified filing rules, a new turnover tax to replace the profit tax, and measures against tax evasion. The proposals follow consultations with the business community.

Small and Medium Enterprises (SMEs) that do not pay Value Added Tax will have to file fewer documents with the tax authorities, and will be required to make submissions less frequently. Also, electronic accounting documents will replace the need for written records currently required by law, and a simple turnover tax calculation will replace the current profit tax. The rate will be 3.5% for trade, and 5% for other sectors.

The package also contains measures to restrict loopholes, tax planning, and undeclared turnover. Certain products will be subject to mandatory labelling requirements, and mechanisms will be introduced to detect undeclared sales. However, secondary inspections will be applied only to taxpayers who are thought to have under-declared their income or calculated excessive offsets.

The application of tax legislation to citizens will also be simplified, with activities such as leasing property and receipt of interest treated as non-entrepreneurial activity.

Vakhtang Mirumyan, the Deputy Chairman of the State Revenue Committee (SRC), was quoted as pointing out that SMEs represent only 1-2% of tax revenues, and that simplifying the tax regime will also mean that the SRC will have less work to do. Further, he stated that the SRC has offered to review tax rules on liability and link the amount directly with the amount of tax charged to the state budget.

TAGS: compliance | tax | business | tax compliance | interest | law | accounting | budget | Armenia | small and medium-sized enterprises (SME) | legislation | tax planning | tax reform | trade

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