Armenia’s government mulls changes to controversial tax reform

By bne IntelliNews September 1, 2016

The Armenian government is discussing changes to a controversial tax reform that the parliament passed in first reading in June, Radio Free Europe/ Radio Liberty's (RFE/RL) Armenian service reported on August 30.

The reform will be subjected to a second reading in the fall. If it passes, it will be enforced gradually in three to five years, according to lawmakers. The International Monetary Fund (IMF) advised Yerevan to push for structural reforms, which include higher tax collections, in a June review.

The bill would increase income tax for those earning over AMD120,000 (€223) per month from 26% to between 28% and 33%, while decreasing the income tax for those earning AMD2mn or more from 36% to 33% and for those earning AMD120,000 or less from 24.4% to 23%. Opposition parties, some pro-ruling party lawmakers and business associations have opposed the bill, claiming that it would seriously affect the private sector.

Prime Minister Hovik Abrahamyan promised “reasonable” amendments to the tax code in a parliamentary debate on August 30, before the reform is passed in September, and said that he is discussing the issue with his cabinet.

Tax collections in Armenia have increased in recent years, but remain low at one fifth of GDP, below its regional peers. Widespread tax evasion and corruption are believed to be the reasons behind the country's poor tax collection track record. 

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