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Tax Officials Faulted For Business Ownership


Armenia - Gagik Khachatrian, head of the State Revenue Committee, at a news conference in Yerevan, 20Feb2013.

Armenia - Gagik Khachatrian, head of the State Revenue Committee, at a news conference in Yerevan, 20Feb2013.

Many tax and customs officials in Armenia own businesses that sometimes enjoy unfair competitive advantage over other private firms, Karen Andreasian, the state human rights ombudsman, said on Monday.

Andreasian criticized the State Revenue Committee (SRC) in an annual report on human rights practices in the country which is being gradually released by his office.

The newly publicized section of the report describes as “worrisome” “numerous cases” of SRC officials engaged in entrepreneurial activity while in office. It says that some of the companies owned by them or their cronies enjoy privileged treatment by the tax and customs authorities which undermines their competitors.

According to Tatevik Khachatrian, an adviser to Andreasian, this conclusion is based on recent interviews with Armenian businesspeople conducted by the ombudsman’s office. None of them is named in the report. Nor does the report specify which concrete SRC officials are engaged in business.

That many of those officials are wealthy individuals is a widely recognized fact. The Armenian media has long portrayed Gagik Khachatrian, the controversial head of the SRC, as one of the country’s richest men with wide-ranging and lucrative business interests.

Opposition politicians, media commentators as well as independent analysts regard business ownership among SRC officials as one of the manifestations of endemic corruption within the tax collection agency. They also consider that a key reason for serious problems with tax administration, which in turn facilitates widespread tax evasion.

The ombudsman’s report accuses the SRC of not doing enough to tackle fiscal fraud. It says at the same time that companies suspected of underreporting their earnings have their assets frozen by the SRC all too frequently.

The SRC declined to comment on the criticism Monday.

Reform of tax administration has been a top declared priority of the current Armenian government. In recent years, the government has simplified taxation procedures and sought to make tax collection less arbitrary through the introduction of mandatory electronic filing of financial statements to the SRC. Andreasian acknowledged those improvements in his report.
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