Armenian leader decides to tackle shadow economy

The tax revenues totaled AMD 240.4bln in January-April 2011 in Armenia, including social payments at the amount of AMD 40.2bln.

The Armenian President recalled recently that the share of shadow economy is great in the country, since many entrepreneurs, specifically, large businesses, avoid payment of taxes and, what affects the state budget.

PanARMENIAN.Net - It is not a secret that bureaucracy and high level corruption predominate in the tax and customs bodies of Armenia, while inspections are held spontaneously, as a result of which small and medium enterprises suffer.

The Armenian State Revenue Committee has started implementing reforms to improve the tax collection and level of provided services. However, the reforms may lead to loss of AMD 16bln due to being risky.

The reforms started in Armenia early in 2011. As part of them, community tax inspections were modernized and electronic terminals were installed. Besides, works are carried out to reduce personal contacts between tax inspectors and the public through introduction of e-governance system. The reforms aim to increase efficiency and transparency of tax and customs structures.

57 documents have been withdrawn from circulation. Besides, the periodicity of income tax payment has been cut from previous 12 to 4 times a year. The loss totaled AMD 5bln.

Nevertheless they are necessary as they will allow in long-term outlook secure information data update and analysis of tools to ensure better tax collection.

There are 82500 operating companies in Armenia. 440 of them are listed as major tax payers, securing 60% of budget tax proceeds. The tax revenues totaled AMD 240.4bln in January-April 2011 in Armenia, including social payments at the amount of AMD 40.2bln, what is 10.2% more than the last year index (AND 22.3bln and AMD 4.4bln respectively).

Thus, Armenia faces a hard task: to facilitate tax administration through reforms, on the one hand, and to secure proper tax collection, on the other hand. Besides, the government should increase the tax-to-GDP ratio, thus leading more economy sectors out of the shadow.

At the same time, the operating system aimed to boost tax collection should be acceptable, fair and not burdensome.

Victoria Araratyan / PanARMENIAN News
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