Armenian Prime Minister Nikol Pashinyan said the government intends to significantly increase the annual turnover threshold for microbusinesses and eventually abandon the turnover tax system in favor of value-added tax.

Pashinyan made the remarks during a briefing following a cabinet meeting while responding to a question about the ruling Civil Contract party’s goal of increasing the share of small and medium-sized businesses in GDP to 40 percent.

A journalist also asked whether Armenia would adopt a new Tax Code by 2031 and phase out the turnover tax system, reports Sputnik Armenia.

“We intend to significantly raise the current annual microbusiness threshold of 24 million drams because inflation has affected its relevance. We will at least double the threshold to 50 million drams,” the prime minister said.

According to Pashinyan, the current turnover tax system does not encourage business expansion or development.

He noted that particular problems arise in agriculture regarding value-added tax procedures when it becomes difficult to ensure that products from rural areas reach stores directly.

“People are forced either to go through very complicated and lengthy procedures or avoid them entirely and operate in the shadow economy, which is a problem for us,” he said.

The prime minister added that Armenia plans to work under a VAT-based system instead of the turnover tax model, although sectors such as agriculture would continue operating under a zero-rate VAT regime.