The Armenian government has attracted 61 billion drams ($163 million) in business investments as a result of its 2009 decision to offer a temporary tax reprieve to companies importing industrial equipment, Prime Minister Tigran Sarkisian said on Thursday.
The decision made at the height of the global economic crisis allows the government to delay by up to three years the collection of a 20 percent value-added tax (VAT) from such imports. They have to exceed 300 million drams and be delivered to manufacturing firms with export potential.
The government has granted such tax privileges on a case-by-case basis. According to Sarkisian, 17 companies have benefited from the scheme since it was introduced in early 2009.
“As a result, we have had investment projects totaling 61 billion drams,” the premier 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.”
“Thus, this legal instrument that was given to the government [by the National Assembly] is producing positive results,” he told ministers.
Sarkisian spoke as the government approved a VAT payment delay for a company that plans to build a flower greenhouse in a village in the central Kotayk province. A government statement said the company called Ecotomato will invest 2 billion drams and create 30 jobs there.
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 Armenia’s tax and customs service.
The businessman, Albert Yeritsian, planned to construct a new bread-making factory in Yerevan and imported $6 million worth of equipment from the Czech Republic for that purpose. Yeritsian reportedly sent it back to the supplier after the rebuff.
VAT has long been the single largest source of Armenia’s tax revenues. More than 60 percent of the government’s VAT proceeds comes from imported goods, commodities and equipment.