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The Executive proposes amendments in the Tax Code. The RA Deputy Minister of Finance Arman Poghosyan presented the main regulations at the NA sitting. From January 1, 2017 the dividends received by the foreign citizens and the persons with no citizenship, and from January 1, 2018 the dividends received by the RA citizens are not reducing incomes and subject to the income tax taxation. To encourage the implementation of the re-investments in the commercial organizations and the rise of the capitalization level on one hand, and on the other hand to keep the taxes on business a practical opportunity was created at competitive level that the participants receiving dividends of the organizations will have an opportunity of the return of the income tax withheld from the dividend will have an opportunity in case, when at least they make re-investments in the amount of tax.

As Arman Poghosyan informed, the experience of the previous years showed that shareholders and participants of the organizations, which are characterized by the necessary level of discipline, do not always make use of the system. It is proposed with this logic to give an opportunity of receiving the withheld income tax from the dividend only to the shareholders or participants of the organizations, which have high level of tax discipline: They did not have the proposing offences by this draft during the tax year preceding the submission of the application of receiving back that tax. “There is an important reason that these offences or the administrative or checking acts become irrevocable laid on their basis. That is: the entity does not agree with the offence bases described by the inspection or administrative act, disputed that act, then irrespective of the circumstance that the act can remain in force at the end of the appeal, if during that period the participant managed to get back the income tax received from the dividend, then it is not subject to restoration,” the Deputy Minister of Finance clarified. He added that the draft was debated for lasting period at the NA Standing Committee on Economic Affairs, the revised version was presented. Now those debates continue.

In response to the question of the NA Vice President Hakob Arshakyan, Arman Poghosyan detailed the framework of the privilege. According to him, this interference should be perceived in the logic of the state-tax paying partner relations: The state assists the investor, the latter should be committed to show disciplined behavior. He underlined that many people have cases of not recording the operation of the cash register, the employee’s adoption for job in the order established by the legislation. “We are hopeful that if the draft is finally adopted with the inclusion of those offences, then their behavior will be changed,” the rapporteur documented.

In his co-report, the Deputy Chair of the Standing Committee on Economic Affairs Babken Tunyan noted that they came to an agreement on several conceptual paragraphs. According to him, the criteria should be distinct for making the companies making use of this opportunity to be disciplined and not allowing to make tax violations, so that all companies subjected to inspection fall under these restrictions. “That is, the conditions will not in a way that one from ten can make use of this system. We made an amendment on the violations for that after the first reading, we have left only the gross violations. The debates will continue on this part,” the Deputy Chair of the Committee said.

The violations resulting from not on purpose or negligence in some cases will be reviewed. “It should be clear that if the criteria established by law are met, then it should testify that to the fact that company is not a conscientious entity,” Babken Tunyan said. As he assessed, the draft should not have retroactive effect.