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Finance Minister Downplays Rising Tax Revenue


Armenia -- Finance Minister Vache Gabrielian at a news conference, 24Jan2011.

Armenia -- Finance Minister Vache Gabrielian at a news conference, 24Jan2011.

Finance Minister Vache Gabrielian downplayed on Monday a more than 13 percent rise in the Armenian government’s tax revenues, saying that more needs to be done to radically improve tax collection in the country.


According to latest official data released by him, the State Revenue Committee (SRC) collected over 591 billion drams ($1.62 billion) in various taxes and duties last year, up from 522.4 billion drams reported in 2009. The figure also represents a 3.8 percent increase over the tax revenue target set in Armenia’s state budget for 2010.

“Unfortunately, we don’t see an improvement in that area in 2010,” Gabrielian told journalists, effectively acknowledging that tax evasion in Armenia remains widespread despite repeated government crackdowns.

The state budget for this year calls for 650 billion drams in tax revenues. Gabrielian, who was the deputy governor of the Armenian Central Bank before being appointed as finance minister last month, cautioned that they will still be equivalent to only 17 percent of Gross Domestic Product -- one of the lowest ratios in the former Soviet Union.

Prime Minister Tigran Sarkisian regularly describes improved tax administration as a top government priority, having pushed through parliament numerous changes in Armenian tax legislation. The most recent legal amendments approved by the National Assembly last month envisage a major simplification of the country’s notoriously cumbersome taxation requirements and procedures.

Both the World Bank and the International Monetary Fund regard genuine tax reform as well as an improvement of the overall business environment as essential for Armenia’s sustainable economic development.

The World Bank considers mining one of the grossly undertaxed sectors of the Armenian economy. The bank indicated earlier this month that the authorities are ready to enact a special “mining code” that would remedy the situation.

Gabrielian did not confirm this, saying that ongoing “discussions will show” whether there is a need for such a code. “We will express our final position on the issue,” he said.
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