Tax submission deadline extended by Armenian authorities due to issues with the filing system
Armenia's Effort to Adopt a U.S.-Style Tax System Encountering Obstacles
Armenia is attempting to emulate the United States' revenue collection model by requiring citizens to submit an annual income declaration. However, the end of the first filing deadline on May 1 has shown that the implementation has been less successful than anticipated.
In the United States, a portion of salaries is often withheld to cover various taxes, and nearly all adults are required to file a Form 1040 tax return at year's end to determine the actual tax amount owed. Many filers end up receiving refunds because more money is withheld than necessary for tax payments.
Armenia started phasing in a similar system in 2023, with plans for full operation this year. However, it appears that a reevaluation of the implementation strategy may be necessary.
During a news conference on May 22, Eduard Hakopyan, the head of Armenia's State Revenue Committee, acknowledged that only 54,000 out of the projected 900,000 filers had submitted their annual tax declarations.
At the conference, Hakopyan reminded citizens that they must submit their declarations to receive any potential refunds. He also extended the filing deadline to November 1.
The low filing number isn't solely due to public resistance. The implementation has been marred by software glitches, and many elderly Armenians lack the necessary computer skills or access to computers to file declarations electronically via the government portal. Privacy regulations also prevent citizens from using accountants or tax preparation services to file declarations for them.
These challenges have contributed to the difficulty in successfully implementing Armenia's annual income declaration system. Poor awareness of the tax system, high rates of unregistered employment, weak enforcement, and a general perception that the tax system is unfair all play a role in discouraging voluntary participation. Additionally, the adoption of electronic invoicing and filing systems has introduced technical complexities and occasional implementation bugs, leading to frustration and non-compliance.
Enhancement data suggests that low legal awareness, a culture of informal and partially registered employment, weak enforcement, and technical difficulties with new electronic systems have hindered the successful implementation of Armenia’s annual income declaration system.
The lackluster response to Armenia's annual income declaration system, as evident in the low number of filers, has raised concerns about its success. technology issues, such as software glitches and a lack of computer access among the elderly, have exacerbated the problem. Moreover, the finance sector, including unregistered employment and a perceived unfair tax system, has contributed to the resistance in submitting declarations.
