Economist says small businesses should be allowed to choose between options for paying turnover tax

YEREVAN, February 3. / ARKA /. Small and medium businesses in Armenia could be allowed to choose between paying a 1 percent turnover tax and providing tax authorities with documentary evidence of their wholesale purchase deals with suppliers or a 3.5 percent turnover tax without providing evidence, economist Vilen Khachatryan said today.

The government-designed law on turnover tax was revised last year lowering the turnover tax for vendors with annual sales of up to 58 million drams ($125,000) from 3.5 percent to 1 percent, but small business owners were to provide tax authorities with documentary evidence of their wholesale purchase deals with larger firms or face heavy fines. 

The government argues the change is  meant to crack down on tax evasion by big business, but vendors say they cannot comply with this requirement because their suppliers usually refuse to provide them with receipts and invoices. 

The revised law was to come into force in 2014 October but after a series of demonstrations staged by vendors in September and October the government was forced to postpone its enforcement until February

"This is one of the possible options -to make concessions and to maintain the principle of voluntariness,” Khachatryan said in an interview with Sputnik-Armenia radio station".

He said the enforcement of the law turnover tax will again be postponed for some time by the government that will attempt to find a solution - either through concessions or offering an alternative option.

After fresh protests this year by owners of small businesses prime minister Hovik Abrahamyan met with protesters last Friday and reportedly agreed to postpone the enforcement of the law until July 1.-0-