Prime Minister Karen Karapetian told the new head of Armenia’s State Revenue Committee (SRC) on Tuesday to ensure that tax officials stop harassing “law-abiding” entrepreneurs and simplify taxation procedures for all businesses.
Introducing Vartan Harutiunian to senior SRC officials, he also called for a major change in the existing system of collecting import duties which has long fueled allegations of widespread corruption within the Armenian customs service.
In remarks publicized by his press office, Karapetian said that Armenian businesses not underreporting their earnings have often suffered from government crackdowns on tax evasion involving more frequent audits of corporate taxpayers.
“Even if such measures can be very beneficial [for tax revenue] but create problems for those operating in the legal [taxation] field, we won’t take such measures,” he said.
“The rules of the game must be defined as clearly as possible and the amount of hassle and necessary paperwork must be reduced to a minimum,” added the premier.
Significantly, Karapetian also moved to curb the SRC’s highly controversial discretionary authority to determine the market value of goods imported to Armenia through its opaque “control pricelists.”
Customs officers, who are part of the SRC, are allowed to do so if they suspect that payment invoices submitted by importers are fake. They have long been accused of abusing this power to extort bribes and guarantee privileged treatment of big importers owned by government-linked people.
Karapetian said that the SRC should draw up a list of “trustworthy” countries whose invoices must be accepted by the Armenian customs service. “We are taking about countries that have value-added tax refunds [for exporters,]” he explained.
The remarks came the day after the announcement of Harutiunian’s appointment as new head of the SRC. Harutiunian is a figure close to the prime minister, having worked at Armenia’s national gas distribution company at a time when it was managed by Karapetian.
In brief comments to RFE/RL’s Armenian service (Azatutyun.am) made just before Tuesday’s meeting, Karapetian said he handpicked Harutiunian to run the tax collection agency “because I trust him.” Asked why the previous SRC chief, Hovannes Hovsepian, was sacked, he said: “I’ll explain to you later on.”
Hovsepian managed the SRC for only seven months. He previously held a senior position in President Serzh Sarkisian’s staff. Both he and Harutiunian refused to comment on Tuesday.
A source of frequent complaints by Armenian businesspeople, the SRC has a strong influence on the country’s business environment. Karapetian has repeatedly vowed to create a level playing field for all businesses since he was appointed prime minister on September 13.
“The tax and customs services are the most corrupt agencies in Armenia,” said Hayk Gevorgian, economics editor at the Yerevan daily “Haykakan Zhamanak.” “Corruption schemes there are so entrenched that it will be very hard to dismantle or even reduce their impact,”
“If Vartan Harutiunian aims to only increase tax revenue a little so that the state budget is executed, he won’t achieve any results,” he claimed.