Armenian SMEs should generate 55-60% of GDP

YEREVAN, May 6. /ARKA/. Small and medium-sized companies in Armenia should generate 55-60% of GDP, up from the current 27%, the acting Minister of Economy Vahan Kerobyan said on May 6.

“We believe that SMEs should change their philosophy. We should classify as small and medium-sized those companies that have the potential to become larger entities: they should have educated founders, the ability to write business plans, and find financial resources,” he said in an interview with the Armenian service of the Radio Free Europe/Radio Liberty.

Kerobyan said his and the ministry's mission is to teach entrepreneurship, expand the availability of financial resources, and improve the legislative framework.

“Today, our legislation, roughly speaking, prohibits the growth of small and medium-sized companies: there is this unfortunate threshold of 115 million drams, and the majority of SMEs work not to exceed it,' he said.

Under the Armenian law, SMEs with an annual turnover of up to 115 million drams are exempt from profit and value-added (VAT) taxes paid by larger businesses. They are only required to pay “turnover tax” equivalent to 2 percent of their revenue. The VAT rate is set at 20 percent. 'It is obvious that serious steps must be taken to stimulate the companies to grow,' he said. -0-