Government of Armenia has fulfilled all the demands of salespersons concerning the Law on Turnover Tax, Vakhtang Mirumyan, Deputy Minister of Finance said in the Government on January 30, while representatives of small businesses were picketing outside the government building.
Prime Minister Hovik Abrahamyan wondered whether the salespersons have any additional demands. In response, Mirumyan said that no additional demands have been received. He explained that the Law on Turnover Tax provides for a compromise agreement i.e. the government tangibly reduces the tax burden in exchange for documentation of transactions, which is, however, opposed by salespersons. The Government postponed the Law till February 1 2015, as taxpayers have some unsettled problems.
"We have considered all their demands," he said. "In particular, the documents for purchase of goods abroad, for instance, in China, Turkey or UAE, can be applied in the country under the Law on Trade Turnover. The inventory requirement has been facilitated as well. Now, salespersons and other merchants are required to submit the inventory of only the groups and the quantity of goods," Mirumyan said.
Meanwhile, hundreds outside the Government building continued to chant "prime minister, get out," "suspend the law," "dismiss the finance minister." Many of them complain that they cannot get documents to purchase goods from wholesalers and big commercial chains. Meanwhile, the given problem was not discussed in the Government today. After long whistles and chanting, 15 picketers were let to meet with the prime minister.
To remind, the law looked to reduce the turnover tax for economic entities engaged in the field of trade will from 3.5% to 1% starting 1 October 2014. The decision sparked public outrage and the Government was reluctant to postpone the law till February 1 2015.
The point is that the Law has a provision on compulsory document flow of the deals, which has prompted the protests. The medium and small importers, mostly, importers of clothes, think that they have no enough resources to hire accountants to compulsorily submit a document on inventory as of 1 Feb 2015 to the tax bodies.
To note, the following types of responsibility will be applied to SMEs: a warning for violation of the law; a 20,000 AMD fine for repeated violation; and a 5% turnover tax for a third case of violation. The economic entities violating the Law on Turnover Tax for the 4th time will occur in the field of VAT. Starting from 1 Jan 2016, an SME having no document flow will have to pay the tax at a higher rate - 5%. VAT tax will be charged if an economic entity fails to submit document flow for a second time.