VIDEO: Government Doubles the Rate of Turnover Tax

The government is raising the rate of turnover tax. The possibility of operating under the turnover tax will also be restricted for a number of sectors. The corresponding legislative package was approved at the government meeting on May 2.

The turnover tax rate will double, increasing from the current 5% to 10%. Prime Minister Nikol Pashinyan emphasized that the country should gradually move away from the turnover tax system.

Finance Minister Vahe Hovhannisyan, presenting the package of legal amendments, expressed dissatisfaction, stating that the turnover tax mechanism has become a privileged tax system: "In almost all sectors, the overall tax burden is significantly higher than the turnover tax," he announced.

The project proposed by the Ministry of Finance also seeks to limit the ability of businesses to operate under the turnover tax and to function as micro-entreprises in certain directions. These include: notarial, legal, lottery, real estate buying and selling, or rental mediation, hairdressing, personal care services, technical maintenance services, software development, construction works, real estate appraisal and measurement, and activities involving the organization of saunas, baths, and steam rooms.

By raising the tax threshold, the government expects to increase state revenues by 17.8 billion drams. The Finance Minister stated that there are over 50,000 turnover tax payers, and collectively they accounted for only 2.3% of Armenia's tax revenues in 2023, which is a low figure.

Additionally, the government has approved a package of amendments to the Tax Code, which states that as of January 1, 2025, certain types of legal and notarial activities will no longer be able to operate within the turnover tax system (they must transition to the VAT system).