Armenian Parliament amended the scandalous Law on Turnover Tax in the second and final reading at an extraordinary meeting on 19 November,
Vakhtang Mirumyan, Deputy Finance Minister, said no proposals were received by the second reading. He recalled that starting 1 October 2014, the turnover tax for economic entities engaged in the field of trade will be reduced from 3.5% to 1%. A status of the family business will be introduced. The Law sparked a wave of discontent of SME representatives who are not ready to hire accountants to submit the necessary documents to the tax agencies. In this light, the Government suggested postponing the deadline for submission of the documents till 1 Feb 2015.
Under the Law, the economic entities having up to 12 million drams annual turnover will be registered as family business and exempted from taxes. Starting 1 January 2015, the following types of responsibility will be applied to SME: a warning for violation of the law, a 20,000 AMD fine for repeated violation and a 5% turnover tax for a third case of violation. The economic entities violating the Law on Turnover Tax for the 4th time will occur in the field of VAT. Starting 1 Jan 2016, a SME having no document flow will have to pay the tax at a higher rate - 5%. VAT tax will be charged, if an economic entity fails to submit document flow for a second time. Alongside with this, a system "law- abiding taxpayer" will be introduced. The system implies that SME will get out of the shadow and start submitting the necessary documents to the taxation bodies. The responsibility for violation of the given law and mechanisms of control over administrative violations will be toughened as well.
On 6 October, Prime Minister Hovik Abrahamyan met with the SME representatives picketing the Government and then charged the finance minister to elaborate and submit an appropriate bill within 3 days.