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It is designed to introduce a universal declaration system of the physical entities in Armenia with phase scenario beginning from 2023. The declarations will be presented with annual regularity. It is designed that the draft declarations will be prepared by the State Revenue Committee (SRC) on the basis of the information being under its disposal. Afterwards they can be edited, adjusted, added by the declarant and presented to the tax body as a version approved by the declarant. The RA Deputy Minister of Finance Arman Poghosyan said about this, presenting the legislative initiative of the Government designing introduction of the physical entities’ universal declaration system in parliament.

On November 25, the Deputy Chair of the NA Standing Committee on Economic Affairs Babken Tunyan convened the discussion of the Professional Expert Community, taking into consideration the public interest connected with the issue. The Deputy Chair of the Committee noted that the initiative is designed to adopt until the end of the year. Parliamentary hearings will also be held before the debate at the NA plenary sitting.

The Deputy Minister of Finance also informed that at the first phase the persons, who already submit declarations to the Corruption Prevention Commission with the logic of the law on Public Service, will present declarations. Persons related to the entrepreneurial units will also be declarants with the first phase. It’s about the physical entities, who are participants or shareholders in a company, which 1 billion AMD and more realized turnover or 20 million AMD or with more volume received a loan from a resident trade organization or is considered to be a real beneficiary in any resident trade organization.

At the second phase, the persons will be, who do work or render services by civil-legal contract, but they are not involved in the first group and the persons, who are considered hired employees and are not involved in the first phase. In the third, last year, the remaining resident citizens will become declarants. This decision of expanding the declarants’ framework is not the final proposal of the Government yet. According to the Deputy Minister, maybe a decision will be, according to which, the minors will not be those submitting a declaration during these three years. The issue of the pensioners submitting a declaration is also subject of discussion.

There are three goals for the introduction of the system. The first goal is the creation of the comprehensive data base of the physical entities’ personified accounting. The second goal is the fixation of the social component as a policy for encouraging investments being carried out also in the human capital. The third one is the introduction and strengthening of the culture for paying taxes.

Accountability will be designed for not submitting or not fully submitting the declarations within the fixed term. “This is a norm of right: when obligation is set, then there should be adequate accountability, otherwise we will announce that we have not paid attention to the discipline. Second, maybe it will not be possible to achieve our goals. The framework of the accountability, which is described in the draft is subject to debate, every episode is subject to debate,” the Deputy Minister said.

Some part of the participants of the debate welcomed, and another part regarded with criticism the initiative of the Government. It was noted that many provisions of the draft law are written in not understandable formulations, so a person cannot understand it refers to him/her. The final goal of the introduction of the system is also not understandable. According to the participants of the debate, the goal should be formulated very distinct, whereas there is disruption between the goals and the content in the presented draft. It was also not clear for some experts if the proposing system of the declaration refers to the incomes or property. The provision, which related to the citizens making use of the return of the income was considered unacceptable. There is a provision in the draft, according to which, if the citizen has not presented a declaration, then the received income tax can be levied.

The Deputy Chair of the NA Standing Committee on Economic Affairs Babken Tunyan clarified: “I accept that there is need for discussion regarding accountability. It is perhaps strict on the return of the income tax, maybe it is worth mitigating or discussing. Simply the logic is the following: if the citizen receives anything from the state, in this case the return of his/her paid tax return, then he/she should transparently work with the state.”

Some part of the debate was held behind closed doors.