Nowadays many families make living by means of family businesses (retail trade, small productions, services), which in comparison with classical business provides exceptionally the primary / essential requirements of those families.
“Family business” is the kind of business type which is conducted exclusively by family members. The BSO experts have carried out researches, as a result of which the “family business”’ outcomes resulting in solely keeping the existence of that family will be calculated.
Judging from the importance of this matter the BSO together with the SME Development National Centre of Armenia and a number of business associations forwarded an initiative of legislative changes in this aspect, according to which:
- The concept of “family business” will be established;
- The “family business” will be exempted from the so called business taxes (excluding the Income tax).
The preliminary analysis of the legislative draft concept will be as follows:
“Family business” will be applicable for those taxpayers (individual entrepreneurs and legal entities) in accordance with the tax legislation, which
- Conduct their economic and business activities exclusively by the involvement of family members, without the participation of third parties, including the entities/individuals acting as the founder of the taxpayer(s) and the taxpayer as an employee (s) receiving salary. This concept defines that family members are considered the founder entities/individuals’ spouses acting as individual entrepreneurs or legal entities, living together/residing parents, unmarried adult children.
- Comply with the second important condition that must be included in the project as a mandatory standard is the volume of the business turnover, which be estimated according to the analysis made and will be considered the threshold, necessary to meet the family’s minimum requirements to make a living.
According to the preliminary discussions the entities, acting in compliance with these two important requirements, will be exempted from business taxes, and employees involved – the family members will be charged a fixed monthly Income tax equal to 5,000 AMD.