Popular pushback is prompting Armenia’s State Revenue Committee (SRC) to rethink efforts to generate additional tax revenue from Armenian labor migrants. Critics assailed the original plan, saying it would have subjected thousands of Armenians to burdensome double taxation.
The source of the controversy is a Commonwealth of Independent States agreement, ratified by Armenia in 2020, to share income and taxation information among members. In 2023, the SRC received its first batch of data covering Armenian migrant workers abroad, according to SRC chair Rustam Badasyan. Based on that information, officials started sending out letters in early February to thousands of citizens who worked abroad in recent years, notifying them that they owed income tax. In addition, the SRC indicated that letter recipients may also have to pay interest on any back tax owed.
A large majority of Armenian migrant workers, roughly 80,000, head to Russia each year to find work. Many of them are seasonal workers, spending a few months in Russia and the rest of the year in Armenia.
When news about the SRC’s intentions spread, disgruntlement ensued. The chief complaint among labor migrants is that the government’s original plan unfairly placed a double taxation burden on them.
One protest on February 21 in the eastern Gegharkunik region blocked a highway. Another protest erupted in Gyumri on February 26. Participants in these demonstrations complained that the government’s failure to properly publicize taxation plans exacerbated their frustrations. They added that if they knew about the potential tax liability of working abroad, they might have reconsidered their plans.
Given the bad optics, SRC officials decided to tweak their taxation plans. The most significant revision is that those earning less than the equivalent of roughly $30,000 abroad each year will be exempt from the taxation scheme. Most labor migrants do not earn that amount, and thus will not be subject to Armenian taxation. The SRC blueprint needs parliamentary approval before it enters force.
The incident is a rare case of public pressure having an impact on policy. While officials tacitly recognized that the taxation plan’s rollout may not have been smooth, they reminded citizens that providing infrastructure and services requires a state revenue stream.
“The culture of paying taxes must be rooted in Armenia; the matter is only about fair taxation,” Badasyan, the SRC chair, was quoted as saying by the News.am outlet.
