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SALES TAX CONTROVERSY: SMALL TRADERS UP IN ARMS OVER NEW CHANGES ADVOCATED BY GOVERNMENT
News | 25.09.14 | 12:04
By Sara Khojoyan
ArmeniaNow reporter
Hundreds of small and medium-sized business owners in Armenia continued
their protest in front of the government building today, complaining
against the changes in the tax legislation that they claim will make
their lives harder.
The matter concerns the reduction of the sales tax from 3.5 to 1
percent, but entrepreneurs say it is additional conditions, including
regarding documentation, that they are concerned about.
The government conditioned the changes in the legislation by continuing
efforts to combat tax evasion in the country, but some experts warn
that the situation may spell serious problems for small businesses,
while political parties opposed to the current government pledge to
be next to the people.
By one of the amendments in the laws the government, in particular,
obliges small business owners to document their entire commodity
turnover or face sanctions.
On Tuesday, several hundred employees of Yerevan's fairs and markets
already gathered near the government building, demanding that the
changes that are due to come into force on October 1 be canceled.
They, in particular, argued that inventory work for their entire
commodity requires much time and resources that increases their costs.
Besides, they say that when making purchases from large companies
they not always get proper documentation that they could produce to
tax authorities.
Under the changes, in case of failing to provide required documents
for the first time owners of SMEs will be cautioned, for the second
time they will be fined 20,000 drams (about $50) and for the third
time they will be fined in the amount of 5 percent of the turnover tax.
The government did not ignore the protestors on Tuesday. Prime Minister
Hovik Abrahamyan first came out to them and then received a group of
them, assuring them that small and medium-sized businesses would not
be in any way affected by the application of the amended law.
He urged the SMEs not to become tax evasion instruments for large
businesses: "We ask you not to work without documents. The government
has provided relief to your tax burden, so that you can grow and
become established businesses."
The prime minister also referred to the concerns of economic agents
that large companies do not provide documents when selling their
products to them. "You should help in bringing the large ones into
the taxation field. This is our goal. We are not your enemy, we will
help you."
Some experts, however, see more risks than benefits in the policy
adopted by the government. Chairman of the Union of Businessmen Gagik
Makaryan fears that the new change may prove deadly for SMEs.
"They want to solve problems with large businesses through SMEs, which
is wrong, as the main blow will be against SMEs. In this case the SMEs
will have only one option - to change the sphere of activity. But what
should they do if the state does not give them any opportunity?" said
Makaryan, as quoted by News.am.
The Prosperous Armenia Party (PAP), which is led by tycoon Gagik
Tsarukyan and positions itself as an "alternative" to the current
government, declared about its intention to stand next to the SMEs
in their "fair protest".
"Being in favor of the reduction of the volumes of shadow economy,
the PAP strongly opposes the implementation of this strategy it at
the expense of small and medium-sized businesses by deteriorating
conditions for them," the party said in a statement.
"Moreover, the application of the law in its entirety will lead to the
closure of a majority of SMEs and thousands of people will lose jobs.
The inefficient administration that the government has towards large
businesses should not become a bludgeon for SMEs," the PAP stressed.
Meanwhile, some economic experts do not think that the law will harm
the SMEs that work in the legal field.
Economist Suren Sahakyan, for example, believes that the struggle of
small businesses today amounts to struggle for tax evasion.
"Everywhere in the world taxes are lowered for tax evasion to become
meaningless and the volumes of shadow economy to decrease, but in our
country people go into the streets to fight for the shadow economy
to stay. Instead of fighting against injustice, they struggle for
their right to steal in conditions of injustice," Sahakyan wrote on
his Facebook account.
"This section of the public is very important for the establishment
and sustainable development of the state, but, from what I can gather
by watching the videos [from the protests], they have not the least
knowledge of the nature, role and significance of the state. It
seems that the logic of the late Soviet period is working - he who
can snatch something from the State is a cool guy, and the more,
the better," the economist commented.
http://armenianow.com/news/57110/armenia_sales_tax_protests_government
News | 25.09.14 | 12:04
By Sara Khojoyan
ArmeniaNow reporter
Hundreds of small and medium-sized business owners in Armenia continued
their protest in front of the government building today, complaining
against the changes in the tax legislation that they claim will make
their lives harder.
The matter concerns the reduction of the sales tax from 3.5 to 1
percent, but entrepreneurs say it is additional conditions, including
regarding documentation, that they are concerned about.
The government conditioned the changes in the legislation by continuing
efforts to combat tax evasion in the country, but some experts warn
that the situation may spell serious problems for small businesses,
while political parties opposed to the current government pledge to
be next to the people.
By one of the amendments in the laws the government, in particular,
obliges small business owners to document their entire commodity
turnover or face sanctions.
On Tuesday, several hundred employees of Yerevan's fairs and markets
already gathered near the government building, demanding that the
changes that are due to come into force on October 1 be canceled.
They, in particular, argued that inventory work for their entire
commodity requires much time and resources that increases their costs.
Besides, they say that when making purchases from large companies
they not always get proper documentation that they could produce to
tax authorities.
Under the changes, in case of failing to provide required documents
for the first time owners of SMEs will be cautioned, for the second
time they will be fined 20,000 drams (about $50) and for the third
time they will be fined in the amount of 5 percent of the turnover tax.
The government did not ignore the protestors on Tuesday. Prime Minister
Hovik Abrahamyan first came out to them and then received a group of
them, assuring them that small and medium-sized businesses would not
be in any way affected by the application of the amended law.
He urged the SMEs not to become tax evasion instruments for large
businesses: "We ask you not to work without documents. The government
has provided relief to your tax burden, so that you can grow and
become established businesses."
The prime minister also referred to the concerns of economic agents
that large companies do not provide documents when selling their
products to them. "You should help in bringing the large ones into
the taxation field. This is our goal. We are not your enemy, we will
help you."
Some experts, however, see more risks than benefits in the policy
adopted by the government. Chairman of the Union of Businessmen Gagik
Makaryan fears that the new change may prove deadly for SMEs.
"They want to solve problems with large businesses through SMEs, which
is wrong, as the main blow will be against SMEs. In this case the SMEs
will have only one option - to change the sphere of activity. But what
should they do if the state does not give them any opportunity?" said
Makaryan, as quoted by News.am.
The Prosperous Armenia Party (PAP), which is led by tycoon Gagik
Tsarukyan and positions itself as an "alternative" to the current
government, declared about its intention to stand next to the SMEs
in their "fair protest".
"Being in favor of the reduction of the volumes of shadow economy,
the PAP strongly opposes the implementation of this strategy it at
the expense of small and medium-sized businesses by deteriorating
conditions for them," the party said in a statement.
"Moreover, the application of the law in its entirety will lead to the
closure of a majority of SMEs and thousands of people will lose jobs.
The inefficient administration that the government has towards large
businesses should not become a bludgeon for SMEs," the PAP stressed.
Meanwhile, some economic experts do not think that the law will harm
the SMEs that work in the legal field.
Economist Suren Sahakyan, for example, believes that the struggle of
small businesses today amounts to struggle for tax evasion.
"Everywhere in the world taxes are lowered for tax evasion to become
meaningless and the volumes of shadow economy to decrease, but in our
country people go into the streets to fight for the shadow economy
to stay. Instead of fighting against injustice, they struggle for
their right to steal in conditions of injustice," Sahakyan wrote on
his Facebook account.
"This section of the public is very important for the establishment
and sustainable development of the state, but, from what I can gather
by watching the videos [from the protests], they have not the least
knowledge of the nature, role and significance of the state. It
seems that the logic of the late Soviet period is working - he who
can snatch something from the State is a cool guy, and the more,
the better," the economist commented.
http://armenianow.com/news/57110/armenia_sales_tax_protests_government