Tuesday, September 30 2014

 The Armenian Parliament's extraordinary sitting on the law on amending the Law on Turnover Tax has not taken place due to the boycott of the Republican Party of Armenia.  

To note, the extraordinary sitting was initiated by three non-coalition forces of Armenian Parliament (Prosperous Armenia Party, Armenian National Congress and Heritage) in relation to the small and medium enterprises' displeasure with this document.  

Earlier economist Mikayel Melkumyan, MP from the Prosperous Armenia Party, said that the instruments implied by the bill on amending the Law on Turnover Tax to take the large business out of shadow are out of date. "There are a lot of up-to-date instruments to take the large business out of shadow. Extra taxation of small and medium businesses will only lead to their closure", the MP said. 

For his part, Hayk Babukhanyan, MP from the ruling Republican Party of Armenia, reminded his non- coalition colleagues that two years before they had voted for the amendments to the Law on Turnover Tax.    

To note, the law on amending the Law on Turnover Tax has caused the displeasure of the SMEs. They have been holding protest actions for several days.  

To remind, starting 1 October 2014, the turnover tax for economic entities engaged in the field of trade will be reduced from 3.5% to 1%.  A status of the family business will be introduced. The economic entities having up to 12 million drams annual turnover will be registered as family business and exempted from taxes. Starting 1 January 2015, the following types of responsibility will be applied to SME: a warning for violation of the law, a 20,000 AMD fine for repeated violation and a 5% turnover tax for a third case of violation. The economic entities violating the Law on Turnover Tax for the 4th time will occur in the field of VAT. Starting 1 Jan 2016, a SME having no document flow will have to pay the tax at a higher rate - 5%. VAT tax will be charged, if an economic entity fails to submit document flow for a second time.  Alongside with this, a system "law-abiding taxpayer" will be introduced. The system implies that SME will get out of the shadow and start submitting the necessary documents to the taxation bodies. The responsibility for violation of the given law and mechanisms of control over administrative violations will be toughened as well.