The RA Draft Law “On Making Amendments to the Tax Code” will be discussed at the December 12 extraordinary sitting of the National Assembly. This was stated by the RA Deputy Minister of Finance Davit Ananyan at a press conference on December 8. According to Ananyan, the new Tax Code offers to change the system of dividend taxation.
“The law proposes to make amendments and supplements to 242 legal norms defined by about 113 articles of the Tax Code”, - detailed Deputy Finance Minister.
According to Ananyan, dividend taxation refers to foreign physical persons and Armenian citizens who receive dividends as shareholders.
The Code adopted in 2016 proposed to tax the dividends of physical persons while the new Tax Code offers to tax those dividends which were worked, distributed and paid by Armenian citizens and foreign citizens from accordingly January 1, 2017 and January 1, 2018.
“There was a fear that the organizations’ financial results of the previous years, which had not been distributed over the years and were accumulated profits, could be imposed income tax by the current edition of the Code. The essence of the legislative amendment is that we change the rules of the game: the profits made after 2017-2018, which will be distributed, will be imposed income tax”, - said Davit Ananyan.
According to a norm acting in the current Code, unless the shareholders of the companies have not made a decision on the distribution of dividends until June 30 of the next year, these dividends will be deemed to be distributed for tax purposes as of June 30. This legal norm, according to the Deputy Minister, will no longer work.
“It is better to have no toolset unless it derives from the key principles of corporate governance”, - he added.
The new Tax Code also offers to make changes in the field of minimum corporate tax.
“In 2004-2014, there was a legally binding obligation to pay a minimum corporate tax, which we abandoned in 2014. We enabled the taxpayers to direct the overpayments without any time limitation to the repayment of liabilities arising in the form of corporate tax in the following years. We introduced time limitation that would be abolished by this law and we will re-establish the norm that taxpayers can use their overpayments without any time limitation”, - informed the Deputy Minister.
“It is also envisaged to set certain restrictions on reimbursement of interest payments on mortgage loans from income taxes. After January 1, 2018, physical persons may benefit from the opportunity of a return on income tax only once, including as a co-borrower”, - stressed Davit Ananyan. The RA Deputy Minister of Finance also underlined the proposed reforms in the spheres of inbound tourism and public catering.
Summing up the amendments, the RA Deputy Minister of Finance Davit Ananyan also answered the questions of media representatives and underlined that these changes in the tax legislation are aimed at creating favourable conditions for the business environment and promoting its development.