Finance ministry discusses introduction of profit tax and income tax compensation mechanisms
YEREVAN, JANUARY 31, ARMENPRESS. Armenia’s finance ministry conducts a deep analysis over production taxes enshrined in the Tax Code trying to develop mechanisms for compensating the possible losses of state budget revenues as a result of the production’s tax burden reduction. For this purpose the ministry has applied to the International Monetary Fund with the request to provide technical assistance.
“We think that the types of taxes we tax the production, in other words, the profit tax and the income tax, face a problem of competitiveness from a territorial point of view as in Georgia both taxes are low than ours. The problem is just that we cannot decrease them. There should be certain compensation, and we are examining on what to transfer this burden so that we can serve the costs. We cannot constantly borrow money and finance the current expenses”, finance minister Vardan Aramyan told Armenpress.
As for the transition of taxation of passenger transportations from fixed to license fee by the Tax Code, the minister said this didn’t pursue a fiscal goal, just the systems were harmonized which led to some influence. “Now we are studying how this harmonization can pressure the passenger transportation tariffs, how to improve it in order to avoid increase in tariffs”, the minister added. According to him, in case of the tobacco and alcohol, they had a fiscal goal by increasing the excise taxes which is justified since if person uses cigarettes a lot, he/she should pay more taxes.
Despite the possible changes in the Tax Code, minister Aramyan says always efforts should be made to avoid making thorough changes in the Tax Code as the process of constant changes can be dangerous. However, the minister said, if there is certain dissatisfaction, it’s necessary to understand its reasons.