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The purpose of the bill providing for amendment and addendum to the Tax Code of the Republic of Armenia is to create a more favorable tax environment for entities that use state support programmes in the field of agriculture. The RA Deputy Minister of Finance Arman Poghosyan said this at the NA extraordinary sitting on December 12.

“According to the current Tax Code, when gratuitous amounts are received in the form of cash and the recipient is considered an organization paying profit tax or an individual entrepreneur, they are obliged to recognize this amount as income in the year of receipt for the purpose of taxation with profit tax. And if there are no adequate expenses next to the income, it turns out that the income is increased to the extent of the profit, which is already subject to taxation at the rate of 18%,” the rapporteur underlined.

“If, for instance, an economic entity implemented an intensive gardening programme, spent some money over time, and then submitted an application to receive a certain amount of co-financing from the state, then this amount is subject to profit tax in the year of receipt. This means that the state support in that regard does not fully serve the final goal,"” Arman Poghosyan said.

According to the Deputy Minister, from the viewpoint of discipline, in other equal conditions, it is preferable for the economic entity to pay the costs, document it, then submit an application and receive the co-financing amount from the state, as in the example of gardening.

Answering the MPs’ questions, Arman Poghosyan reaffirmed that conditioned by the specifics of the field of activity, the regulation proposed by the initiative is intended only for the state support programmes implemented in the field of agriculture.

The initiative was adopted in the first reading.