The impact of currency regulation on the country's export potential has been the focus of scientific research and discussion among economists for years. Currency regulation is a backbone element to maintain the competitiveness of the country's economy, macroeconomic stability, and to stimulate economic growth. The aim of this research is to analyse the impact of the exchange rate of the Armenian national currency (dram) on the country's export potential, as well as the choice of a currency regulation policy stimulating export expansion and economic growth in Armenia. The study employed the methods of statistical and comparative analysis, as well as the construction of logistic assumptions. The authors conducted a statistical analysis of the dynamics and structure of Armenia's exports by product groups and countries. They revealed that, with the exception of exports to Russia, Armenia's exports to other countries has a high ratio of raw materials. As known, the exchange rate has the greatest impact on the price competitiveness of finished products in foreign markets. The authors evaluated the impact of currency regulation policy implemented in Armenia on the export potential and competitiveness of Armenian goods, especially in the EAEU markets. The results show that Armenia is not able to maximize its export opportunities due to the uncompetitive exchange rate of the national currency. The key conclusion of the research is the thesis that Armenia should abandon the non-market mechanisms for ensuring exchange rate stability, the Central Bank should immediately shift to a policy of free-floating national currency and non-intervention, which will significantly expand the presence of Armenian finished products in foreign markets, especially in the Russian Federation.

Usually, it is diffcult for developing countries to choose a currency regulation policy because of institutional inadequacy, including a signifcant level of concentration in commodity markets, and a high degree of dependence of the national market and fnancial system on exogenous factors and a huge external debt. This article is dedicated to the analysis and evaluation of key factors affecting the formation of the Armenian national currency (dram) exchange rate, as well as to the choice of the currency regulation policy in Armenia. The authors carried out a statistical and econometric analysis of the factors of the foreign exchange rate formation, taking into account the specifcs of the transition economy as a whole, as well as the features of the Armenian economy, in particular. The authors have identifed the exogenous and endogenous factors of the foreign exchange rate formation of the dram, depending on the inflow and outflow of foreign currency. Further, the authors specifed the influence of dominant factors on the choice of the currency regulation policy in the country. The authors carried out an econometric analysis of the factors identifed at the frst stage of the study using the VAR model. The results obtained from this model proved the hypothesis of the non-market nature of the dram’s exchange rate formation. The authors concluded that the dram’s exchange rate formation has non-market nature because of signifcant intervention on the currency market by the “monetary authorities”. The key conclusion of this study is the thesis about the need to change the approaches to currency regulation in Armenia in favour of the transition to a free-floating exchange rate policy in order to stimulate sustainable rates of economic growth in the long term.

Problems in tax administration, especially direct taxation, are one of the most important challenges for the taxation system of Armenia. The high level of the informal sector further affects the effective functioning of the system and the replenishment of the state budget. In this regard, there is a need for reforms in direct taxation presented in this article. The research objective is to evaluate possible effects of abolishment of profit tax in the Armenian economy. For this purpose, we approached the neoclassical dynamic general equilibrium model presented in expanded form and in discrete time. Impact assessment of the reforms in corporate taxation system in Estonia and Georgia was also based on the same model. Therefore, after the effects of the abolishment of profit tax in the Armenian economy are assessed, a comparative analysis of the results observed with those of Estonia and Georgia will be conducted. The model calculates the effect of changes in income tax rates on government revenues, capital per unit of labor, level of consumption and output in the country. The article also presents the parameterization of the model considering the specifics of the Armenian economy. The study has revealed that reforming the taxation system for organizations in Armenia will lead to an increase in the general welfare of the population, net investments and aggregate output. At the same time the tax revenues of the state budget of Armenia will decrease by 3.92%. The results of the study will allow the government of Armenia to apply a new approach to taxing the profits of organizations. It will lead to an increase in the transparency of business, a decrease in the level of corruption and the concealment of the profits. Keywords: traditional income tax model; Estonian income tax model; income tax; tax avoidance; neoclassical dynamic general equilibrium model; taxation system of Armenia For citation: Sandoyan E. M., Petrosyan H. G. Abolishment of profit tax effects in the Republic of Armenia. Finansy: teoriya i praktika = Finance: Theory and Practice. 2019;23(1):96-105. АННОТАЦИЯПроблемы в налоговом администрировании, особенно в части прямого налогообложения, являются одним из важнейших вызовов для системы налогообложения Армении. Наличие высокого уровня неформального сектора еще больше влияет на эффективное функционирование системы и пополнение государственного бюджета. В связи с этим возникает необходимость проведения реформ в прямом налогообложении, что представлено в данной статье. Цель работы -оценка последствий отмены налога на прибыль в Армении с помощью неоклассической динамической модели общего равновесия и обложения распределенных дивидендов подоходным налогом. Представленная модель применяется и в оценках воздействия реформирования системы налогообложения организаций в Эстонии и Грузии. В связи с этим в статье проводится сравнительный анализ полученных результатов трех стран. Модель рассчитывает влияние изменения в ставках налога на прибыль на государственные доходы, капитал на единицу труда, уровень потребления и...

taxation, income tax, profit tax, financial sector, capital market, corruption, transparency, E62,

The article considers the issues of inflationary monetization in postsoviet countries and how the deepening of financial intermediation could overcome this. It analyses the current situation of financial intermediation in mentioned countries and finds the institutional obstacles for its further development taking into account the consequences of recent global financial crisis. This implies the reconsideration of some basic concepts of financial intermediation development in postsoviet countries and the model of its regulation and supervision as well.