Will Income of Individuals Be Declared? Government Plans to Introduce New System

The government plans to introduce a general declaration system for the income of individuals in Armenia. During a government meeting, a draft law amending the Tax Code and the Code of Administrative Offenses was approved. Minister of Finance Tigran Khachatryan, presenting the draft, announced that principles would be established to guide the interaction between tax authorities and declarants.

According to him, a system of "social credits" or "social expenditures," widely applied in international practice, will be implemented simultaneously. The Minister stated that the declaration system is proposed to be introduced in three phases: in 2023, 2024, and 2025, according to the categories of declarants.

“For the reporting year 2023, declarations must be submitted by: a. citizens of the Republic of Armenia holding public service, community service, and/or public office; b. notaries, residents, and individuals who are considered personal income earners; c. residents of the Republic of Armenia who, as of December 31, 2023, have declared a total income of one billion AMD or more from resident commercial entities; d. residents of the Republic of Armenia identified as beneficial owners under the law on combating money laundering and terrorist financing; e. residents who received loans of 20 million AMD or more during 2023; f. residents who utilized the income tax refund provisions stipulated in Article 160 of the Code throughout 2023; g. residents who obtained income from sources outside the Republic of Armenia during 2023.”

In the second phase, for the reporting year 2024, declarations must be submitted by: a. wage employees; b. individuals earning taxable income under civil law contracts; c. residents who have received loans of 20 million AMD or more during 2024; d. residents who utilized the income tax refund provisions stipulated in Article 160 of the Code in 2024; e. residents obtaining income from sources outside of Armenia in 2024.

In the third phase, declarations will be required for the 2025 reporting year and subsequent years from citizens residing in the Republic of Armenia. Khachatryan noted that international partners recommended establishing a mechanism of accountability as well.