POSSIBLE AMENDMENTS TO LAW ON SIMPLIFIED TAX DISCUSSED
Noyan Tapan
March 19, 2008
YEREVAN, MARCH 19, NOYAN TAPAN. The current situation from the
viewpoint of application of simplified tax is that small enterprises
cannot mostly make use of the opportinities of this tax, whereas big
enterprises "have fouled" the RA Law on Simplified Tax, as a result
of which the state has now raised the issue of abolishing simplified
tax. Deputy of the RA National Assembly Hermine Naghdalian stated
this at the March 18 discussion of the law at the RA Chamber of
Commerce and Industry (CCI). Today the problem is not to allow –
by using the opportunities provided by the current legislation –
big enterprises to enter "simplified tax field".
The chairman of the RA CCI, National Assembly deputy Martin Sargsian
reminded that during the March 15 consultation conducted by the prime
minister Serge Sargsian, the heads of the State Tax Service adjunct to
the Armenian government suggested submitting proposals on additions
and amendments to the RA Law on Simplified Tax. By instructions of
the prime minister, such proposals have to be submitted until March 22.
The chairwoman of the Union of Merchants of Armenia Tsolvard Gevorgian
said that since the above mentioned consultation, the union received
over a hundred proposals from businessmen. She expressed a hope that
taxation of small and medium business will be regulated in such a
way that corruption factors will be reduced to a minimum.
The deputy head of the State Tax Service Armen Alaverdian said that
the use of efficient tax levers to promote small and medium business
rather than the issue of application of simplified tax should be
discussed. In his opinion, the definition of small and medium business
should be given once more.
According to the director of Logicon Development company Vahe
Petrosian, under the provisions of the new Law on Simplified Tax,
natural persons and private businessmen engaged in industry and the
service sector, except for manufacturers of agricultural products and
those engaged in some other activity, can no longer be considered as
simplified tax payers. In his words, SMEs in industry and service
sectors have no opportunity to work by paying simplified tax as
they mainly purchase raw material at fairs, without confirmative
documents. As a result, a 20% value added tax forms on sales, which
is a profit tax making up 15% of surplus sales. Taking other taxes
into account, the tax burden of such economic entities makes 35-37%,
whereas in case of using simplified tax this burden would make 5%.
V. Petrosian proposed that opportunities should be created for small
and medium producers, as well as for enterprises engaged in tourism,
services, software and Internet access services to work by paying
simplified tax.
The deputy chairman of the RA CCI, director of Viasphere Technopark
Aram Vardanian proposed that the minimum amount of annual turnover for
application of simplified tax for newly-created high-tech production
enterprises should be established at a higher level than the index
of 50 million drams (about 161,812 USD) currently used for all
the branches, because these enterprises are especially in need for
introduction of expensive equipment.
A. Alaverdian objected to the introduction of simplified tax in
production, saying that in this case two regimes of producers’ taxation
and a possibility of unequal competition will form. He said that 2%
of the annual rvenues of the RA state budget come from taxation of
simplified tax payers.
According to the executive director of the National Center for
Development of Small and Medium Entrepreneurship Ishkhan Karapetian,
over 97% of business entities currently registered in Armenia are small
and medium enterprises, more than 80% of which have up to 5 employees.