Expert criticizes changes to turnover tax

YEREVAN, March 9. / ARKA /.  Harutyun Mesrobyan, a management expert, has criticized today a set of changes to the law on turnover tax, which allow small and medium-sized companies to choose one of the two options to pay their turnover tax, saying the law benefits only oligarchs.

The changes in question propose that turnover tax be levied from businesses with annual sales of up to 113.4 million drams, up from 58.35 million set by the current law. 

The turnover tax was earlier lowered by the government from 3.5 percent to 1 percent for small companies with annual sales of up to 58 million drams, but the amended law obligated the small business owners to provide tax authorities with documentary evidence of their wholesale purchases made from larger firms or face heavy fines.  

The new law was to come into force on February 5 but after protests the government postponed its enforcement until July 1.  The latest changes set a 5% turnover tax for companies with annual sales of up to 113.4 million drams, which will refuse to provide documentary evidence of their wholesale purchase. Those that will provide it will pay a 1 percent tax. 

Speaking at a news conference Mesrobyan said the proposed changes passed by the parliament in the first reading are ridiculous, 'because the oligarchic economic system in Armenia makes all laws increases the tax burden on medium and small businesses.'

According to him, 'normal' oligarchs, who usually have close connections with all the branches of power, do everything to make laws serve their narrow interests. 

According to the Union of Armenian Employers, there are about 70,000 SMEs in the country, of which 58,000 are micro and small enterprises, 10,000 are medium companies. Together they account for 43% of Armenia’s GDP and 5 percent of tax revenues. -0-