YEREVAN, May 20. /ARКА/. At its meeting on Tuesday, the Armenian National Assembly’s Committee on Economic Affairs approved draft amendments to the RA Tax Code and the Law “On State Duty,” which provide for changes in taxation of the banking sector.
As Deputy Finance Minister Arman Poghosyan noted, a significant portion of the financial transactions and functions performed by Armenian banks are exempt from VAT.
“In order to somehow compensate for this unpaid tax, various approaches are used in international practice. Some countries establish special taxes specifically for the banking sector, while others simply do not apply the standard corporate income tax rate to the banking sector, but rather use a higher corporate income tax rate. Some countries apply a so-called excess profit tax,” he explained. According to the Deputy Minister, the government discussed all possible options to find a solution that would not lead to higher prices for banking services or generate inflation risks.
A model was chosen under which dividends distributed by banks to their shareholders would be taxed not at the standard 5% rate, as is the case in other sectors of the economy, but at a higher rate of 15%. This involves increasing the tax rate on dividends distributed to both individuals and legal entities, including residents and non-residents.
“That is, as long as profits remain in the bank and are converted into various banking products, including loans and intermediary services, the government does not intend to impose additional burdens on banks. However, when these profits are withdrawn from the banking system, the government is currently proposing to impose a higher tax rate,” Poghosyan explained. The amendments are also aimed at making investments in banks or equity participation more attractive, so that minority shareholders are interested and have the opportunity to acquire equity stakes in banks. It is proposed to maintain the withholding tax on dividends at the current level if the bank’s shares are listed on a government-approved stock exchange.
Deputy Chairman of the Economic Affairs Committee Babken Tunyan noted that three circumstances could result from the law: either banks will pay more taxes in the form of dividend tax, or the process of corporatization will be stimulated, or dividends will not be distributed and banks will use these funds to increase their capital.
In response to this comment, the Deputy Minister of Finance noted that in any of these scenarios, the public benefit will be recognized. According to bank reports published in accordance with IFRS standards, the net profit of the Armenian banking system for 2025 amounted to 421.3 billion drams, an increase of 16.01% compared to 2024. In the first quarter of 2026, the net profit of banks amounted to 103.48 billion drams, compared to 101.18 billion drams for the same period in 2025, an increase of 2.27%. ($1 = 367.87 drams)
