Accessibility links

Armenia Registers Leap In Tax Revenues

A butcher shop in Yerevan, under the watchful gaze of President Serzh Sarkisian.

A butcher shop in Yerevan, under the watchful gaze of President Serzh Sarkisian.

YEREVAN -- Armenia's Finance Ministry says tax revenues rose by almost 23 percent in the first half of this year, RFE/RL's Armenian Service reports.

The improved tax receipts led to a sharp fall in the state budget deficit, which had skyrocketed during last year's recession.

The first-half deficit reported by the ministry stood at 16.9 billion drams ($46 million), equivalent to 1.3 percent of Gross Domestic Product and well below the government's full-year target.

The official figures show the State Revenue Committee (SRC) collecting 286.2 billion drams in various taxes and duties, or 11.7 percent more than was projected by the government for the six-month period. That mainly resulted from a 36 percent surge in proceeds from value-added tax (VAT), the largest source of tax revenues.

Roughly two-thirds of all VAT came from imported goods taxed at the border. But the Finance Ministry said domestic commerce generated most of the VAT gain. This contrasted with official statistics showing stagnation in first-half retail sales.

Significantly, revenues from corporate profit tax shrank by more than 3 percent to 43.5 billion drams. The drop suggests that the government has yet to make good on its repeated pledges to make large companies underreporting their earnings "the number one target" of its crackdown on tax fraud.

Profit tax continues to account for only a small share of their contributions to the state budget.

Officials hope to address the problem by, among other things, deploying permanent SRC "representatives" at some large enterprises suspected of tax fraud. A list of 24 such entities was approved by Prime Minister Tigran Sarkisian's cabinet in late June. It includes Armenia's leading importers of basic foodstuffs, alcohol, cigarettes, and drugs.

In a related measure, the government has also obliged some 285 companies with annual revenues above 1 billion drams to have their financial reports filed with the SRC certified by independent auditors, starting this year.