Reforms to be implemented in tax system of Armenia

PanARMENIAN.Net - According to official data, representatives of large businesses also met their obligations to the state budget: the index of paid taxes and state duties amounted to AMD 15 billion in February 2010 that is 3.8 billion higher as compared with the same period of last year. However, Prime Minister Tigran Sasrgsyan said during a governmental session that, according to 2009 data, the tax collection has decreased, while the number of tax inspections has increased, specifically at small and medium businesses, which face difficulties in opposing to the pressure of tax inspectors. Indexes of 2009 raise concern: the total number of inspections by tax bodies increased by 82% in 2009, while the additional funds obtained through them decreased by 25%. It should be noted that the government's strategy aims to minimize personal relations of taxpayers and tax bodies. Factually, our tax inspectors are unable to refrain from personal contacts with business representatives.

At the same time, the Prime Minister stated that the conditions of business environment have improved, despite numerous shortages. And this serves as another stimulus for the economic growth, which totaled 5.5% by the end of the first quarter. Though the proceeds of Armenia’s 344 large taxpayers from sale of products totaled AMD 143.2 billions in February 2010 that is 19.9% higher as compared with the same period of last year, a decrease in proceeds of 120 taxpayers was recorded during the reported period.

Armenia's government plans to reduce the budget deficit within several years, as it sharply increased during the crisis period, amounting to 7.7% in GDP structure. To this end, the authorities plan to implement reforms in tax administration that will allow bringing the state budget deficit to its pre-crisis level – 3%. It should be noted that first steps in this direction have been taken. The Armenian parliament adopted the Law on Taxes in the final reading, establishing the state's responsibility for delays in returning of overpaid taxes to taxpayers. Besides, under structural changes in economy, the government plans to revise the tax base, as the ratio of taxes/GDP has worsened by the end of the first quarter of 2010 as compared with the same period of last year. Meanwhile, additional funds will be attracted to promote the economy. And the private sector will shoulder the major part of the state debt service.

The country's government will face serious difficulties in achieving these goals, as the current level of tax collection is insufficient, thus, serious measures shall be undertaken to improve it, as well as to facilitate the efficiency of the State Committee of Revenues.