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TAX POLICY IN ARMENIA
The tax policy provided by the government is one of the main
components for economic policy of each state. The role of tax system is more
predetermined for such state which is being in the process of economic
changes, moving from one economic formation to another economic
formation. The characteristics of Armenian development economy during
transaction period were bad adaptability of international markets modern
requirements.1
The experience of taxation proofs that the fiscal functions of taxes is
getting more important during transactional period and the propos of fiscal
function of taxes to provide constant revenues for state budget. The
characteristic of tax policy provided by Armenian Government was fiscal
function which lasted short time. Besides that at the beginning period of
Armenian independency the tax laws adopted by Armenian Parliament had a
lot of common with the tax laws of previous USSR, which was connected with the
correlation between states of previous USSR.2
It is important to consider the level of economy of the country during
implementation of tax policy as well as such issues, which should solve tax policy
and tax system.
After getting independency development of tax system in RA can be
divided into 2 periods
I. 1992 – 1997
II. since 1997 – now
Dividing in such 2 periods is connected with enactment of the main law
about taxes. In the first time the law about taxes was adopted by independent
Armenian parliament in 19th of April 19923 and was named “The law about taxes
and duties of RA”. After adopting of this law there were adopted laws about
Value Added Tax (VAT), Profit Tax, Income Tax, Excise Tax, Land Tax, Property
Tax. Those laws where changed a lot during 1993-1994 which was connected
with transformation currency system from “ruble” into Armenian nation currency
“dram”.
A lot of Armenian authors the period 1992-1997 are considered to be the
period of formation of tax system4.
The new law about taxes was adopted by Armenian Parliament 14th of
April 1997. The title of new law was “Law about taxes of RA” and it became valid
starting 30th of May 1997. By the enactment of that new law there was started
the period of reformation5. By this law there was defined the conception of “tax
activity” the meaning of “Tax Law” as well as there was improved the priority of
normative acts regulating tax relationships. There was also defined the existence
liquidation tax responsibility, exception of double taxation etc.
One of the specifications of development tax system of 2nd period was
the enactment of “Law about Simplified Tax of RA”. Simplified tax is very specific
Ara Markosyan, PhD dissertation, “Management of Tax Burden in Armenia”, scientific supervisor Dr. S. A.
Davoyan, Yerevan, 2004, page 3
2 V. Harutiunyan, “Tax Policy and Their Improvement Issues in Republic of Armenia” Yerevan, 2003 page
65
3 “Tax Inform” journal, № 1, Tax State Department of RA, 1993, page 5-16
4 V. Harutiunyan, “Tax Policy and Their Improvement Issues in Republic of Armenia” Yerevan, 2003 page
66
L. Badanyan and others “Finances and Credits” Yerevan, 2003, page 120
5 V. Harutiunyan, “Tax Policy and Their Improvement Issues in Republic of Armenia” Yerevan, 2003 page
66
L. Badanyan and others “Finances and Credits” Yerevan, 2003, page 120
1
tax which is characteristically only for tax system of RA. The main aim of the
investment of this tax was to clarify tax calculation for small and medium sized
business as before small and medium sized business was taxes by general
taxation system, which usually made difficulties for small and medium sized
business and as a result of that, brought up a lot of complains.
The Simplified Tax is substitutable tax for enterprise activity, which is paid to
State Budget instead of VAT and (or) Profit Tax (Income tax)6. Simplified Tax
calculated on base of turnover. It’s defined 3.5% for shops and kiosks, as well as
10% for rental activity and 20% for Notarial activity.
The international experience of tax theories provides that tax policy and
tax system are evaluated with a lot of parameters and indexes. But more
important parameters of those are
1. Tax Burden
2. The ratio of direct and indirect taxes
3. The level of tax recruitment
The tax burden (or tax burden index) on macroeconomic level defines the ratio
of Total Amount of Taxes and GDP.
REFERANCES
1. Ara Markosyan, PhD dissertation, “Management of Tax Burden in Armenia”,
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scientific supervisor Dr. S. A. Davoyan, Yerevan, 2004
V. Harutiunyan, “Tax Policy and Their Improvement Issues in Republic of
Armenia” Yerevan, 2003
“Tax Inform” journal, № 1, Tax State Department of RA, 1993
L. Badanyan and others “Finances and Credits” Yerevan, 2003
www.arlis.am “Law About Fixed Payments of RA” Paragraph 1, Article 6,
Adopted by National Assembly, 7th July 1998, ՀՕ-236
A. A. Sargsyan, “Issues of Tax Burden Management in RA” PhD dissertation,
Scantific Supervisor, S. A. A Davoyan, Yerevan, 2006
www.armstat.am
www.laws.am
www.taxservice.am
“Law about Simplified Tax of RA” Article 3, adopted by National Assembly of RA 05 June 2000, Yerevan,