Republic of Armenia: Review of Tax Expenditures
High-Level Summary Technical Assistance Reports, September 29, 2023
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Bibliographic details
- Authors: Charles Vellutini, Parvina S Rakhimova, Marius van Oordt, David Wentworth
- Published: September 29, 2023
- Series: High-Level Summary Technical Assistance Reports
- DOI: https://doi.org/10.5089/9798400255236.029
Overview
- High-level summary technical assistance report assessing tax expenditures in the Republic of Armenia.
- Part of the Summary Technical Assistance Report series, which provides high-level summaries of assistance to IMF capacity development recipients, describing high-level objectives, findings, and recommendations.
- Covers major tax expenditures related to the value-added tax, excise taxes, the profit tax, and the personal income tax.
- Supports the authorities’ objective to consolidate revenue.
Key findings
- Total estimated tax expenditures were in excess of 5.5 percent of gross domestic product in 2021.
- Streamlining preferential regimes, exemptions, and incentives has strong potential for boosting revenue while improving the equity and efficiency of the tax system.
- Specific regimes and exemptions identified for potential repeal or reform:
- The micro-entrepreneur regime could be repealed to subject those enterprises to the turnover tax.
- Income tax exemptions granted to public caterers could be repealed.
- Income tax exemptions granted to free economic zones could be repealed.
- Income tax exemptions granted to securities could be repealed.
Policy recommendations
- Repeal or reform preferential regimes that generate large tax expenditures to consolidate revenue.
- Subject micro-entrepreneurs to the turnover tax instead of maintaining a separate micro-entrepreneur regime.
- Remove income tax exemptions for public caterers, free economic zones, and securities to broaden the tax base and improve equity and efficiency.
- Streamline VAT, excise tax, profit tax, and personal income tax preferential treatments to reduce revenue loss and complexity.
Scope and emphasis
- Analytical focus on the major tax expenditure categories: value-added tax, excise taxes, profit tax, and personal income tax.
- Emphasizes revenue consolidation, equity, and efficiency gains from rationalizing exemptions and incentives.
Republic of Armenia: Review of Tax Expenditures
Content in this bundle
- High-Level Summary — Technical Assistance Report: Republic of Armenia — Review of Tax Expenditures