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ARMEN ALAVERDYAN: TAXATION PACKAGE NOT 100% WHAT WE WANT
By Samvel Adamyan
Information-Analytic Agency NEWS.am
Sept 10 2009
Armenia
Question: What is the tax collection situation? Any progress?
Answer: We have made some progress. If we compare the figures early
this year and at the end of the first half, we will see a positive
trend. I should say that the economic crisis really had an impact
on tax collection, which is natural. The GDP decreased by 18.5% this
January-July, mostly in the economic sector that are of interest to
us from the point of view of taxation. They are "effectively taxable"
sectors. Among them are construction, production, import and sale
of building materials, the mining industry. In general, a range of
imported articles, and I would single out car import. Many people
did not believe that taxation will be possible at this level. But if
the taxation process failed, huge debts to the government-financed
organizations would have been formed in the state budget, mutual debts
would have been accumulated, which, in turn, would have exacerbated
the economic crisis. However, the taxation system enabled the state
budget to cover major expenditures, without accumulating debts. All
the payments were effected in time, which prevented social problems.
I can say that we have "met" and "seen off" the consequences of
the economic crisis with credit. I hope that the world economy,
particularly the trends toward economic activities in developed
economies, will reach developing countries, including Armenia. The
economic decline will be followed by a period of stabilization. If
during that period we are able to collect taxes, including the taxation
of shadow turnover, we will have even better figure during the growth
period. So we are quite optimistic, and the figures for the last two
months confirm our optimism.
Question: Some hold the opinion that stricter administration is risky
for the economy amid a crisis. Do you share this opinion?
Answer: Our administration has been reasonable. Last August, a SME
development package was approved, which freed small and medium-sized
enterprises (SME) of administrative pressure. I would like to enumerate
the benefits: from January 1, 2009, SMEs can present fewer financial
reports or may not present them at all. They do not any longer pay the
value-added tax, and present quarterly financial reports on compulsory
social payments in place of monthly ones. The SMEs do not any more keep
ledgers. That is the SMEs enjoy administrative freedom. Thereafter,
the Government made a decision imposing restrictions on inspections
of SME. As a result, I can state with confidence, SMEs have had no
administrative blows. Otherwise the consequences of the crisis would
be even graver. That is why, instead of additional administrative
measures, we distributed the work using economic mechanisms and trying
to make turnover taxable. We are also carrying out selective work
with a number of economic entities, which has enabled us to collect
the necessary amount of taxes, particularly this June, July and August.
Question: The Government has once again submitted the taxation package
to the Parliament. What essential amendments have been made, and is
any serious debate expected in Parliament?
Answer: The RA Ministry of Finance submitted the package though
we are an interested party. The package is not one hundred percent
what we, as taxation authority, would like it to be. As a result of
parliamentary discussions, the Government made serious amendments
to the part dealing with the institution of tax officers and the
taxable funds of producers of excisable goods. I would like to say
that all the economic entities have focused their attention on the
institution of tax officers despite the fact that the package deals
with most interesting tasks of introducing a system of inspections
of VAT payments and profit taxes. We did not consider it advisable
to increase tax officers' the presence at economic entities amid
the crisis and during the post-crisis period. We created conditions
that prevent tax officers' influence on production process. Tax
officers used to justify their presence by the struggle against
shadow economy, particularly by the need for inspections of output and
price transparency. In their turn, economic entities objected to tax
officers' presence as unnecessary. As a result, the sides made mutual
concessions. Specifically, the package was seriously amended for the
purpose of protecting producers' interests and is to to submitted to
Parliament in its second reading within a few days.
From: Emil Lazarian | Ararat NewsPress
By Samvel Adamyan
Information-Analytic Agency NEWS.am
Sept 10 2009
Armenia
Question: What is the tax collection situation? Any progress?
Answer: We have made some progress. If we compare the figures early
this year and at the end of the first half, we will see a positive
trend. I should say that the economic crisis really had an impact
on tax collection, which is natural. The GDP decreased by 18.5% this
January-July, mostly in the economic sector that are of interest to
us from the point of view of taxation. They are "effectively taxable"
sectors. Among them are construction, production, import and sale
of building materials, the mining industry. In general, a range of
imported articles, and I would single out car import. Many people
did not believe that taxation will be possible at this level. But if
the taxation process failed, huge debts to the government-financed
organizations would have been formed in the state budget, mutual debts
would have been accumulated, which, in turn, would have exacerbated
the economic crisis. However, the taxation system enabled the state
budget to cover major expenditures, without accumulating debts. All
the payments were effected in time, which prevented social problems.
I can say that we have "met" and "seen off" the consequences of
the economic crisis with credit. I hope that the world economy,
particularly the trends toward economic activities in developed
economies, will reach developing countries, including Armenia. The
economic decline will be followed by a period of stabilization. If
during that period we are able to collect taxes, including the taxation
of shadow turnover, we will have even better figure during the growth
period. So we are quite optimistic, and the figures for the last two
months confirm our optimism.
Question: Some hold the opinion that stricter administration is risky
for the economy amid a crisis. Do you share this opinion?
Answer: Our administration has been reasonable. Last August, a SME
development package was approved, which freed small and medium-sized
enterprises (SME) of administrative pressure. I would like to enumerate
the benefits: from January 1, 2009, SMEs can present fewer financial
reports or may not present them at all. They do not any longer pay the
value-added tax, and present quarterly financial reports on compulsory
social payments in place of monthly ones. The SMEs do not any more keep
ledgers. That is the SMEs enjoy administrative freedom. Thereafter,
the Government made a decision imposing restrictions on inspections
of SME. As a result, I can state with confidence, SMEs have had no
administrative blows. Otherwise the consequences of the crisis would
be even graver. That is why, instead of additional administrative
measures, we distributed the work using economic mechanisms and trying
to make turnover taxable. We are also carrying out selective work
with a number of economic entities, which has enabled us to collect
the necessary amount of taxes, particularly this June, July and August.
Question: The Government has once again submitted the taxation package
to the Parliament. What essential amendments have been made, and is
any serious debate expected in Parliament?
Answer: The RA Ministry of Finance submitted the package though
we are an interested party. The package is not one hundred percent
what we, as taxation authority, would like it to be. As a result of
parliamentary discussions, the Government made serious amendments
to the part dealing with the institution of tax officers and the
taxable funds of producers of excisable goods. I would like to say
that all the economic entities have focused their attention on the
institution of tax officers despite the fact that the package deals
with most interesting tasks of introducing a system of inspections
of VAT payments and profit taxes. We did not consider it advisable
to increase tax officers' the presence at economic entities amid
the crisis and during the post-crisis period. We created conditions
that prevent tax officers' influence on production process. Tax
officers used to justify their presence by the struggle against
shadow economy, particularly by the need for inspections of output and
price transparency. In their turn, economic entities objected to tax
officers' presence as unnecessary. As a result, the sides made mutual
concessions. Specifically, the package was seriously amended for the
purpose of protecting producers' interests and is to to submitted to
Parliament in its second reading within a few days.
From: Emil Lazarian | Ararat NewsPress