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WHAT WILL THE UNIFICATION OF TAX AND CUSTOMS SERVICE GIVE
Vasak Tarposhyan
Hayots Ashkharh Daily
21 Aug 2008
Armenia
As we know by President Serge Sargsyan's decree the Customs State
Committee and Tax State Committee merge into one State Income
Committee.
During the recent years the issue of the reunification of tax and
customs service has always been discussed. But for different reasons
no practical steps were taken in that regard. For the last 7 years
tax and customs services have been working separately. If in terms
of the collection of tax entries it did show some good results,
the same can't be said about the improvement of the economic field.
There were lots of failings in tax and customs system, which required
a review. The role of these two structures is especially important
in terms of the provision of economic rivalry and the formation
of an equal field, whereas the situation in Armenia in that regard
is far not a secret. And one of the main reasons is that these two
structures used to function separately, sometimes giving chance for the
formation of shadow economy and the intensification of disproportionate
competitive relations.
Undeniably, by separated structure, during the previous years the tax
officers ensured significant growth of entry: the average yearly growth
of income fluctuates within 25-30%. But nevertheless the percentage
of tax collection in gross domestic product i s significantly small
in Armenia. Actually during the recent one-two years this index is
being improved, but it still remains very small as compared with not
only the developing but also regional countries.
If in Georgia tax-GDP ratio reaches 24-25%, in Armenia, as of the
last year's results it made up 16,1%. Of course a serious growth
is predicted for this year. But it will never solve the issue of
overcoming the obstacles created in economy and tax system.
The issue of the low level of tax-GDP ratio in Armenia was permanently
raised by international financial organizations. Of course there are
certain objective reasons for that. But it is a fact that the growth
of shadow economy is the main one.
No matter how the previewed indexes of the tax income were permanently
completed during the recent years, the separate functioning of
the tax officers created favorable conditions for the formation of
shadow economy.
And the existence of unequal competitive field is the bases of the
before mentioned.
The issue first of all exists in the tax field, in the sphere of the
realization of imported goods. As a consequence of not coordinated
actions, which was conditioned by the separate functioning of
tax-customs system lots of goods imported to Armenia get lost in
the tax field. By realizing these goods in hidden ways the importers
evade taxes.
As a consequence of all the before mentioned not only does the state
budget, but also the whole economy that loses its competitive
advantages suffer. It serves as a reason for the so-called
"undocumented" commodity circulation, which becomes one of the bases
of the formation of shadow.
The second important factor of the unification of tax-collecting
bodies is the transformation of the goods from the tax field by customs
border. That is to say the export. As we know the export from Armenia
is not only free of taxes but the principle of VAT compensation also
functions. Whereas certain phenomena take place in this process due
to which only the income of the state suffers.
We must also underscore that in Armenia tax and customs services used
to function jointly, as one ministry. But in that status the system
worked for only 2 years, which is naturally a very short term for
the assessment of the productiveness of similar structure.
Vasak Tarposhyan
Hayots Ashkharh Daily
21 Aug 2008
Armenia
As we know by President Serge Sargsyan's decree the Customs State
Committee and Tax State Committee merge into one State Income
Committee.
During the recent years the issue of the reunification of tax and
customs service has always been discussed. But for different reasons
no practical steps were taken in that regard. For the last 7 years
tax and customs services have been working separately. If in terms
of the collection of tax entries it did show some good results,
the same can't be said about the improvement of the economic field.
There were lots of failings in tax and customs system, which required
a review. The role of these two structures is especially important
in terms of the provision of economic rivalry and the formation
of an equal field, whereas the situation in Armenia in that regard
is far not a secret. And one of the main reasons is that these two
structures used to function separately, sometimes giving chance for the
formation of shadow economy and the intensification of disproportionate
competitive relations.
Undeniably, by separated structure, during the previous years the tax
officers ensured significant growth of entry: the average yearly growth
of income fluctuates within 25-30%. But nevertheless the percentage
of tax collection in gross domestic product i s significantly small
in Armenia. Actually during the recent one-two years this index is
being improved, but it still remains very small as compared with not
only the developing but also regional countries.
If in Georgia tax-GDP ratio reaches 24-25%, in Armenia, as of the
last year's results it made up 16,1%. Of course a serious growth
is predicted for this year. But it will never solve the issue of
overcoming the obstacles created in economy and tax system.
The issue of the low level of tax-GDP ratio in Armenia was permanently
raised by international financial organizations. Of course there are
certain objective reasons for that. But it is a fact that the growth
of shadow economy is the main one.
No matter how the previewed indexes of the tax income were permanently
completed during the recent years, the separate functioning of
the tax officers created favorable conditions for the formation of
shadow economy.
And the existence of unequal competitive field is the bases of the
before mentioned.
The issue first of all exists in the tax field, in the sphere of the
realization of imported goods. As a consequence of not coordinated
actions, which was conditioned by the separate functioning of
tax-customs system lots of goods imported to Armenia get lost in
the tax field. By realizing these goods in hidden ways the importers
evade taxes.
As a consequence of all the before mentioned not only does the state
budget, but also the whole economy that loses its competitive
advantages suffer. It serves as a reason for the so-called
"undocumented" commodity circulation, which becomes one of the bases
of the formation of shadow.
The second important factor of the unification of tax-collecting
bodies is the transformation of the goods from the tax field by customs
border. That is to say the export. As we know the export from Armenia
is not only free of taxes but the principle of VAT compensation also
functions. Whereas certain phenomena take place in this process due
to which only the income of the state suffers.
We must also underscore that in Armenia tax and customs services used
to function jointly, as one ministry. But in that status the system
worked for only 2 years, which is naturally a very short term for
the assessment of the productiveness of similar structure.