Pashinyan announces intent to introduce 23% flat income tax with further 3% decrease in five years

YEREVAN, NOVEMBER 1, ARMENPRESS. Acting Prime Minister Nikol Pashinyan highlights the need to have a simple and flexible taxation system for encouraging investments and ensuring investment flow.

Speaking in parliament today at the final round of electing a PM, he presented the upcoming reforms in the tax system.

“On this path we are ready to apply the following tools. As you know, the VAT overpayment refund institution has been introduced since January 1, 2018. And citizens, businessmen, can receive VAT tax overpayments every 6 months. With tax code amendments we are going to cut this 6 months to three months, with a prospect of entirely eliminating this timeframe in the future,” he said.

He said that the most important and the most discussed issue is changing the income tax.

“Having a flat income tax is a very delicate issue. When we say flat income tax, we mean not only the same income tax level for all salaries, but also the equality of income tax- profit tax and dividend tax blocks. The initial intent of the government is to set up a 23% flat income tax as a result of the tax legislation amendments with a condition that we will reduce this indicator up to 20% during the coming five years, again for everyone. This will be an extremely important change” he said.

He said it will be important in terms of investments, the development of high tech sector.

“We are now ready to take a step of reducing the income tax by more than 10% for high tech sector employees, and we hope that this will lead to increase of investments in the sector,” he added.

The special session of parliament convened by virtue of law has kicked off for the final round of electing a prime minister.

The sole candidate is incumbent acting Prime Minister Nikol Pashinyan.

He has beennominatedas a formality by the Yelk and Tsarukyan factions as lawmakers are expected to deliberately vote him down in order to dissolve the parliament – a requirement for calling early elections.

The first round failed to elect a prime minister, as intended.

During the first round, the Yelk faction nominated Nikol Pashinyan in a technical maneuver because the Constitution says that a “vote” must take place.

Pashinyan took office after massive protests in April forced president-turned PM Serzh Sargsyan to resign. But Sargsyan’s Republican Party (HHK) still has most seats in the 105-seat parliament. Since taking office, Nikol Pashinyan has numerously said that the incumbent parliament doesn’t represent the people and that early elections should take place as soon as possible.

He resigned on October 16to trigger the process which is required to lead to early elections.

If everthing goes as expected, this will be the first time in the history of the Republic of Armenia when a parliament is being disbanded.

Edited and translated by Stepan Kocharyan