Thousands of jewelers in Armenia are at risk of shutting down their businesses due to new tax regulations. This assessment was shared by Nairi Sargsyan, a former aide to Prime Minister Nikol Pashinyan, in response to mass protests by workers at the "Gold Market" shopping center.
Under the new rules adopted by the government, small and medium-sized businesses with annual revenues up to $290,000, including jewelry companies, are required to pay double the turnover tax starting in October 2024. Previously, businesses paid 5% on trade activities and 3.5% on manufacturing, but these rates have now been doubled. Additionally, a new 20% tax on undocumented purchases has been introduced.
"In practice, this means that a jeweler who buys an old piece of jewelry from a private individual for $50 and sells it after processing for $54 will have to pay over $15 in taxes on a profit of just $4. This is an absurd situation," Sargsyan explained.
The expert warns that the new rules could have catastrophic consequences for the industry, which employs approximately 10,000 people. He noted that buyers from neighboring countries, who traditionally purchase gold jewelry in Armenia, may shift to markets in Turkey, Azerbaijan, and the UAE due to inevitable price increases.
To salvage the situation, Sargsyan proposes not only repealing the 20% tax on undocumented purchases for businesses operating under the turnover tax system but also introducing a special flat rate of 1% for transactions involving gold and precious stones, regardless of turnover.
"The prime minister's original intention to crack down on undocumented trade was correct, but the implementation of this idea has been disastrous for businesses," Sargsyan emphasized.
