ArmInfo. In Armenia, steps have been taken to address the issue of changing the taxation of dividends received by shareholders of commercial banks. On April 30, the Government of the Republic of Armenia approved amendments to the Tax Code and the Law "On State Duty."
Presenting the amendments, Deputy Minister of Finance of the RA Arman Poghosyan noted that currently, the overwhelming majority of financial operations and transactions carried out by banks are exempt from VAT, which is an internationally recognized approach. In matters of taxation, different states compensate for VAT with other solutions. One such solution is increasing the dividend tax rate for bank shareholders.
Arman Poghosyan emphasized that Armenia's banking sector, also being exempt from VAT payments, has demonstrated a high level of profitability in recent years and therefore requires additional taxation. When developing the package of amendments, the main focus was placed on eliminating any potential pressure on the banks themselves, which could lead to an increase in interest rates and more expensive services, as well as the emergence of inflationary risks. Therefore, regulators settled on a mechanism that increases the level of taxation for shareholders of commercial banks. The changes stipulate that if a decision is made to pay dividends to bank shareholders, these transactions will be taxed not at the current 5% income tax rate, but at a 15% rate, regardless of the status held by the beneficiary — whether an individual or a legal entity.
However, at the same time, banks will be granted certain benefits. If a bank's shares are listed on organized stock markets (exchanges), the tax rate on dividends from listed securities will remain at the previous 5% level. As the Deputy Minister noted, work is currently underway to clarify the list of such stock exchanges.
According to independent experts, this measure may also limit the number of "pocket banks" owned by a single shareholder or a group of affiliated shareholders and will push banks to enter organized exchange platforms.
