Armenian Prime Minister Nikol Pashinyan clarified upcoming changes to the tax legislation, set to take effect on January 1, in a video address on his Facebook page. He dismissed accusations that the new turnover tax rules are aimed at suppressing small businesses.
According to the Prime Minister, the current legislation imposes a 5% turnover tax on shops selling undocumented goods, meaning goods with no purchase documentation. When documentation is provided, the rate can drop to 1.5%. The new rules will increase the tax on undocumented goods to 10% while simultaneously lowering the rate for documented transactions to 1%.
“The real issue is not for small businesses but for large businesses,” Pashinyan emphasized. He explained that large businesses exploit undocumented sales through small retail outlets to hide the true volumes of imported goods, thereby evading significant taxes. “These changes will reduce the shadow turnover of large businesses, while law-abiding small entrepreneurs will actually see their tax burden decrease by 0.5%,” the Prime Minister noted.
Pashinyan acknowledged that it is impossible to eliminate long-standing practices with a single step but stressed the importance of changing this "illogical and anti-state" policy.
Earlier, BMG reported that Armenia currently has a preferential tax regime for small and medium-sized businesses, individual entrepreneurs, and notaries with an annual turnover of up to $295,000. Instead of VAT and profit tax, they pay a single turnover tax: 5% for commercial activities and 3.5% for production sectors.
