On November 17, the Armenian government endorsed a draft decision outlined in the government's 2021-2026 program, under which a universal income declaration will be introduced in the country. The system is expected to become operational in 2023 and will gradually involve all resident citizens of Armenia within the next three years.
According to the Armenian Finance Minister Tigran Khachatryan, the declarations will be pre-filled by the tax authority, including available information about income and paid taxes or the information obtained by the tax authority from third parties.
"Each declarant will have an identified account in the declaration system. Entering the electronic reporting system with identified data, the declarants will be able to verify the data, make changes and additions, if necessary, and approve the final version of the declaration by April 20 of each year," the Minister noted during a weekly cabinet meeting on Thursday.
Under the law, the government also plans to introduce promotional measures through the social credit system. Within the framework of this system, the residents submitting the declaration will have an opportunity to get some of their income taxes refunded for their or their family members' documented healthcare, education, and housing expenses.
Minister Khachatryan also mentioned that the government would impose penalties ranging between 20,000 and 300,000 drams on those citizens who fail to confirm declarations. Khachatryan added that the amount of penalties might be reviewed in the parliament.
The draft decision was submitted to the National Assembly for an urgent discussion.
Government authorities praised the planned reform, calling it “politically and economically significant ."Some economic experts mention that this change will enable the state to monitor the income movement of individuals and act in a more targeted manner, for example, towards low-income citizens. Others point out that it can help address the financial flows associated with tax avoidance.
Some critics from civil society argue that the law may place a disproportionate burden on citizens, who may face difficulties filling out the declarations. This, in turn, might lead to a failure since the responsible authority will not have enough resources to prosecute citizens for failing to submit their declarations.
Currently, income, asset, and interest declarations in Armenia are filed only by public officials and their family members. The declarations are submitted to the Corruption Prevention Commission, which maintains the declaration registry, analyses the process of these declarations, and conducts the verification.
