“Micro-enterprises, the annual turnover of which does not exceed 20 million drams, will be fully exempted from taxes,” the draft amendment to the Tax Code says.

Subjects of microeconomics can also, without any restrictions, hire individuals as employees, for whose salaries the income tax will be calculated at a fixed rate of 5,000 drams instead of the current 23 or 28 percent.

Micro-enterprise tax changes should take effect on January 1, 2020.

The tax code also proposes to significantly simplify the system of taxation of small businesses. In particular, it is proposed to introduce a unified micro-enterprise taxation system instead of self-employed and family business taxation systems, establishing that legal entities and individual entrepreneurs can use this tax system if the annual sales turnover does not exceed 20 million drams.

The current tax legislation provides for the following tax systems: the tax system for self-employed, in which taxpayers who carry out certain activities with a turnover of up to 9 million drams are fully exempted from taxes. Another alternative taxation system is the family business taxation system, in which taxpayers with a turnover of up to 18 million drams, operating through the efforts of family members, are fully exempt from taxes.

Instead of these two systems, a single micro-enterprise taxation system is proposed.

“The problem is that the results of applying taxation systems of previous years, as well as international experience, show that the diversity of tax systems inevitably leads to a number of negative phenomena, in particular with regard to the complexity of tax legislation, ambiguities of legislation, uncertainties and complexity of tax administration”, - noted in the draft.

In the new edition of the Tax Code, it is also proposed to leave the threshold of turnover tax unchanged - 115 million drams.

Recall that from January 1, 2019, the previous changes in the Tax Code provide for a reduction in the turnover tax threshold from 115 million drams to 58.35 million drams.

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