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Armenian Tax Reprieve Touted As Success

Armenian Prime Minister Tigran Sarkisian (center, at a business forum in Yerevan in June) says Sarkisian said on June 23 that 17 companies have benefited from the scheme since it was introduced.
YEREVAN -- Prime Minister Tigran Sarkisian says Armenia has attracted 61 billion drams ($163 million) in investments as a result of its decision to offer tax breaks to companies importing industrial equipment, RFE/RL's Armenian Service reports.

The decision to postpone the payment of taxes -- which was made at the height of the global economic crisis in early 2009 -- allows the government to delay by up to three years the collection of a 20 percent value-added tax (VAT) from such imports.

Transactions must exceed 300 million drams and be delivered to manufacturing firms with export potential to qualify for the temporary tax suspension.

The government has granted the tax privileges on a case-by-case basis.

Sarkisian said on June 23 that 17 companies have benefited from the scheme since it was introduced.

"As a result, we have had investment projects totaling 61 billion drams," he said at a weekly session of his cabinet. "As of now, about 1,000 new jobs have been created and it is expected that a total of 1,700 jobs will be created during the implementation of this scheme."

Sarkisian spoke as the government approved a VAT payment delay for a company that plans to build a greenhouse to cultivate flowers in a village in the central Kotayk province. A government statement said the company, Ecotomato, will invest 2 billion drams and create 30 jobs.

The government raised questions about the fairness of the tax reprieve in September 2009 when it rejected a similar application from a prominent entrepreneur whose son was charged with plotting to assassinate Gagik Khachatrian, the controversial chief of the tax and customs service.

The businessman, Albert Yeritsian, planned to build a bread-making factory in Yerevan and imported $6 million worth of equipment from the Czech Republic for that purpose.

Yeritsian reportedly had to send the equipment back to the supplier after the government's rejection.

VAT has long been the single-largest source of tax revenues in Armenia. More than 60 percent of the government's VAT proceeds come from imported goods, commodities, and equipment.