Introduction of turnover tax affects small and medium-sized businesses

YEREVAN, May 3. /ARKA/. Introduction of turnover tax from January 1, 2013 is having an adverse effect on Armenian small and medium-sized businesses, according to Tatul Manaseryan, head of Alternative think-tank

"Inflexible fiscal policy closes oxygen for businesses, especially small ones," he said at a press conference on Friday. According to him, the introduction of turnover tax has not eased the situation, because there is no differentiated approach to the taxation of small and medium-sized enterprises.

"We need to change the situation. Small retail outlets on the outskirts of Yerevan and in the regions should be treated differently, not like retail outlets in downtown Yerevan,’ he said.

The chairperson of the Union of Armenian Merchants, Tsolvard Gevorgyan, echoed Manaseryan saying the new tax has only exacerbated small and medium-sized businesses.

According to her, under the new law SMEs with an annual turnover of up to 58 million drams pay 3.5% of turnover tax.

"As a result, taxes for these businesses almost doubled as opposed to those which pay VAT", she said. She then urged the authorities to cancel the turnover tax, which, in her view, will significantly strengthen SMEs and lead to reduction of migration.

The turnover tax was introduced for small and medium-sized enterprises with an annual turnover of up to 58.35 million drams which before that paid either income of profit taxes. The turnover tax rate for retail traders is  3.5% of their annual income, for notary activities the rate is 20 percent, for  rental, royalties, alienation of  property and assets the rate is  10 and 5 percent for other types of activity. In 2012 SMEs accounted for almost 43 percent of Armenia’s GDP. ($ 1 - 411.50 drams). -0-