Pashinyan seeks to amend income tax system

Prime Minister Nikol Pashinyan has presented two options for amendments in the current income taxing system.

Speaking to his Facebook audience live on Thursday, the PM mentioned that under the current system salaries up to 150,000 drams are taxed 23%, salaries from 150,000 drams to 2,000,000 drams are taxed 28% and salaries more than 2,000,000 drams are taxed 36%.

Pashinyan says that the current system needs to be changed because it is a rather difficult tax burden for citizens. “We believe that this tax system encourages the [black market] and doesn’t encourage wage raise. The problem is that a profit tax also exists in Armenia – with a 20% rate plus 5% dividend tax,” he said, adding that this leads to business operators writing off their revenue as profit and then as dividend and then only employees are paid in cash. “Meaning, someone gets 250,000 drams salary, but the paperwork states, for example, 100,000, and the remainder is paid cash,” he said.

“Now there is an option for us to have two scales instead of three, as well as change the salary volumes. I.e. to define the threshold not 150,000 drams, but 250,000. Therefore, salaries up to 250,000 drams will be taxed 20%, and higher salaries will be taxed 25%,” he said.

The second option is to set a 23% flat income tax and profit tax, plus the dividend tax, he said. The second option implies a system whereby all salaries will be taxed 23% in revenue tax and the total of the profit tax and dividend tax will be again 23%.

He said that the people’s opinion is very important for the government and that public discussions will be held over the matter.