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TAX ADMINISTRATION IS NOT AIMED TO REFILL THE BUDGET WITH MONEY FROM FINES
Anahit Danielyan
KarabakhOpen
04-02-2008 11:51:54
Interview with the head of the NKR State Tax Service Artak Balayan
Mr. Balayan, Karabakh-based businessmen complain tax administration
is too rigid. What changes have taken place in this sphere?
A series of amendments came into effect from January 1, 2008 which
are aimed to improve tax administration. For instance, the size of the
fine for overdue tax has been made reduced. The fine is 0.075 percent
per day of delay (for up to 90 days) and 0.1 percent for more than 90
days. The fine for delay of payment for up to 90 days has been halved
from last year. The fine was cut considering the economic situation and
the imperfect mechanism of payments. In most cases delay of payment
is not the fault of the taxpayer. A differentiated system of fines
has been introduced. At the same time, to avoid accrual of long-term
fines, the size of the fine remains above the average commercial loan.
Are there cases when the taxpayer pays the taxes but is fined?
It is possible only in case of overdue taxes when the taxpayer does
not pay the fine per each day of delay.
After your appointment did any taxpayer who used to avoid taxes begin
paying taxes?
There were entities which did not pay taxes at all. However, it is not
a secret that most entities avoid taxes by hiding their real turnover,
and some entities have overdue taxes and accrued fines. We are already
making efforts. In particular, a working group has been set up which
studies the cause of the accrual of fines and ensures payment. Besides,
supervision is enhanced to reduce black economy. The efforts allow
expecting progress in 2008.
What is the sum of taxes paid in the past 2 years and the sum of fines?
In 2006, return on tax was 7999.9 million drams, in 2007, 9960.3
million drams, including 239.3 million drams of fines in 2006 and
227.2 million drams in 2007.
Mr. Balayan, what new approaches toward the relations between taxpayers
and tax service are being considered?
I think relations between taxpayers and tax service should be
reconsidered.
Each taxpayer should realize that tax administration is not aimed
to refill the budget with money from fines but to protect indirectly
the interests of all the law-abiding taxpayers because revelation of
entities which avoid paying taxes helps prevent them from drawing
immense profits and unfair competition. A change in the relations
between the tax service and taxpayers is also important for public
awareness and transparency of tax administration. The activities of
the tax service will be based on the principle "Inform and teach to
control" because most sanctions are due to the taxpayer's unawareness
of the law. As a result, it may cause financial problems in companies,
reducing effectiveness up to closure.
In your opinion, what is the influence of tax administration on the
development of business in NKR?
Presently, the influence of the tax policy on the development of
business in NKR is not absolutely positive, which is due to the
imperfection of the mechanisms of control and supervision, as well
as legislative gaps. The reforms which are presently being worked out
will stimulate entrepreneurship and enhance tax discipline, insuring
maximum collection of budget receipts.
Anahit Danielyan
KarabakhOpen
04-02-2008 11:51:54
Interview with the head of the NKR State Tax Service Artak Balayan
Mr. Balayan, Karabakh-based businessmen complain tax administration
is too rigid. What changes have taken place in this sphere?
A series of amendments came into effect from January 1, 2008 which
are aimed to improve tax administration. For instance, the size of the
fine for overdue tax has been made reduced. The fine is 0.075 percent
per day of delay (for up to 90 days) and 0.1 percent for more than 90
days. The fine for delay of payment for up to 90 days has been halved
from last year. The fine was cut considering the economic situation and
the imperfect mechanism of payments. In most cases delay of payment
is not the fault of the taxpayer. A differentiated system of fines
has been introduced. At the same time, to avoid accrual of long-term
fines, the size of the fine remains above the average commercial loan.
Are there cases when the taxpayer pays the taxes but is fined?
It is possible only in case of overdue taxes when the taxpayer does
not pay the fine per each day of delay.
After your appointment did any taxpayer who used to avoid taxes begin
paying taxes?
There were entities which did not pay taxes at all. However, it is not
a secret that most entities avoid taxes by hiding their real turnover,
and some entities have overdue taxes and accrued fines. We are already
making efforts. In particular, a working group has been set up which
studies the cause of the accrual of fines and ensures payment. Besides,
supervision is enhanced to reduce black economy. The efforts allow
expecting progress in 2008.
What is the sum of taxes paid in the past 2 years and the sum of fines?
In 2006, return on tax was 7999.9 million drams, in 2007, 9960.3
million drams, including 239.3 million drams of fines in 2006 and
227.2 million drams in 2007.
Mr. Balayan, what new approaches toward the relations between taxpayers
and tax service are being considered?
I think relations between taxpayers and tax service should be
reconsidered.
Each taxpayer should realize that tax administration is not aimed
to refill the budget with money from fines but to protect indirectly
the interests of all the law-abiding taxpayers because revelation of
entities which avoid paying taxes helps prevent them from drawing
immense profits and unfair competition. A change in the relations
between the tax service and taxpayers is also important for public
awareness and transparency of tax administration. The activities of
the tax service will be based on the principle "Inform and teach to
control" because most sanctions are due to the taxpayer's unawareness
of the law. As a result, it may cause financial problems in companies,
reducing effectiveness up to closure.
In your opinion, what is the influence of tax administration on the
development of business in NKR?
Presently, the influence of the tax policy on the development of
business in NKR is not absolutely positive, which is due to the
imperfection of the mechanisms of control and supervision, as well
as legislative gaps. The reforms which are presently being worked out
will stimulate entrepreneurship and enhance tax discipline, insuring
maximum collection of budget receipts.