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At the sitting of May 22, the National Assembly debated the legislative package providing for amendments and addendum to the Tax Code and a number of related laws. The RA Deputy Minister of Finance Arman Poghosyan presented the issue for debate in the first reading.

The adoption of the legislative package is conditioned by the implementation of the important goals of the tax policy outlined in the Government’s programme and, in particular, of the alternative taxation systems. The first concerns alternative systems of taxation.

The second objective is to introduce economic incentives for withholding tax payers to document their transactions.

The third goal is to reinterpret the general systems of taxation with the logic that the types of activities that are not characterized by the characteristics of micro-enterprise or small business are transferred to a fairer tax environment, an environment dependent on results and are in the general system of taxation.

During the Q&A session and the speeches, the MPs touched upon the controversial provisions of the initiative, and noted that there will be an increase in the additional burden for some types of activities, in particular, attorney services.

MP Hovik Aghazaryan inquired about the question what will happen to those business entities working in the value added tax (VAT) domain, that should be transferred to the turnover tax domain from January 1, 2025, but during that time they made transactions, offset the VAT or received it back. “With the draft, they should be revised, that is, they should have retroactive effect in that sense. Don’t you see a problem here?” the MP asked.

Responding to the MP’s concern, the Deputy Minister of Finance clarified that the business entities will offset VAT during the period in which they will be considered VAT payers. Those business entities who, after receiving the VAT tax money back, have moved to alternative taxation systems, in this case, the turnover tax system, will not have the opportunity of offset. According to Arman Poghosyan, the existing regulations create an opportunity for certain tax planning and perhaps unfair tax savings. “Our proposal is aimed at limiting that opportunity,” the rapporteur said and agreed that the proposed intervention should be debated carefully, so as not to worsen the opportunity of the business entities, because the latter made their decisions in a different environment. The Deputy Minister expressed his willingness to debate the issue during the period from the first to the second reading.

In his related report, the Deputy Chairman of the Standing Committee on Economic Affairs Babken Tunyan informed that during the period from the first to the second reading, either debates or parliamentary hearings will be organized with the participation of all the concerned parties, if necessary. The Committee endorsed the issue.