By Atom Markarian
The Armenian government has improved its compliance with a legal provision exempting exporters from the payment of a 20 percent value-added tax (VAT), a senior official claimed on Wednesday.Armen Alaverdian, deputy head of the State Taxation Service, told RFE/RL that during the first half of this year the tax collection agency refunded 5.2 billion drams ($10 million) to Armenian companies selling their products abroad. He said the same amount of money was returned to them during the whole of 2003.
Armenian law entitles domestic exporters to a rebate on VAT paid during the purchase of raw materials and services from suppliers. That means a particular company can get a financial compensation from the state equaling 20 percent of the price of its exported goods. The payment must be carried within three months from their shipment abroad.
Armenian companies, notably the country’s biggest copper manufacturer, have long accused the government of failing to honor the tax break designed to promote exports. The total amount of their VAT refund claims accumulated for years stood at 38 billion drams as of July 1. Some business executives complain privately that they are being forced to “voluntarily” forgive the government debt.
Alaverdian argued that the government routinely delays payments of the refund because it needs more time to check the veracity of financial statements filed by relevant firms. He claimed that they often overstate the value of their exports in order to get extra money from the tax authorities.
“There are delinquent firms which want to make money through this mechanism,” he said. “We are really concerned about that,” he said.
Armenia’s net exports rose by 7 percent to $340 million in the first half of this year, according to official statistics.
Analysts believe that the tax authorities are also reluctant to pay up in order to be able to meet their growing annual revenue targets. The government is to collect 140 billion drams in taxes and 116 billion drams in customs duties under its budget for this year. The projected fiscal revenues represent a 16 percent increase from last year’s level. But they would still make up a modest 16 percent of Armenia’s Gross Domestic Product.
Alaverdian said tax collection is proceeding according to plan and will almost certainly meet the 2004 target.