By Samvel Adamyan

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.