Citizens Renting Out Their Apartments Will No Longer Evade Taxes

Citizens renting out their apartments or providing money as a loan will no longer be able to evade taxes. This was announced by the Minister of Finance Tigran Khachatryan during today's government meeting, presenting a draft amendment to the Tax Code concerning micro-enterprises.

The Minister first recalled that micro-enterprises were initially intended for self-employed citizens, who are exempt from taxes if their annual income is up to 24 million AMD (an average of 2 million AMD monthly). Tigran Khachatryan mentioned that the current legislation does not define specific sectors of activity for micro-enterprises, which creates certain loopholes.

“For example, a person can declare themselves as a micro-entrepreneur and rent out their own property, claiming that income received from rental, for instance, should not be taxed because their status has been declared as that of a micro-entrepreneur. However, in reality, when renting an apartment, the citizen is required to pay 10% income tax on their earnings. In another scenario, a person might lend their money to someone else and demand that the interest income received from that loan be untaxed as a micro-entrepreneur,” said Khachatryan.

According to the Minister, the legislative initiative seeks to ensure that such passive incomes are not exempt from taxation, particularly from the 10% income tax. Additionally, the new regulations are set to limit the possibility of avoiding income tax on salaries of employees.

Tigran Khachatryan pointed out that employers registered as micro-entrepreneurs do not pay income tax for the salaries they pay their employees. Furthermore, sometimes large companies register their employees as micro-entrepreneurs to evade taxes on their earnings.

Nevertheless, in Khachatryan's view, the proposed tightening measures cannot regulate the entire tax field. “We understand that as long as there are differing tax regimes, they will continue to pose problems. They will only cease to be problematic when we have a unified taxation regime,” said Khachatryan.

At the end of the discussion, the government approved the package of proposals. It will soon be presented to the parliament for discussion and adoption.