Armenia’s new Prime Minister Hovik Abrahamian promised over the weekend that his incoming government will create a level playing field for all businesses and prevent their harassment by tax authorities.
“For us, support for entrepreneurship will be a priority, and everyone must realize that the economy is the basis for the country’s progress,” Abrahamian said at a meeting with top government officials and leaders of the country’s largest business association.
“There must be no interference in business or unfair obstacles,” he said. “Everyone must realize that this field is free … and that nobody will be creating obstacles. I’m going to be consistent. Every investor should know that they are in safe hands, within the bounds of the law.”
Abrahamian’s predecessor Tigran Sarkisian likewise declared improvement of Armenia’s flawed business environment a top priority during his 6-year tenure. Sarkisian’s cabinet initiated a range of changes designed to improve tax administration and at the same time reduce tax evasion. Local entrepreneurs still complain of harassment by tax officials and privileged treatment of their wealthier competitors connected to the government.
Abrahamian, who has held senior local and central government positions since the mid-1990s, himself is thought to have benefited from such connections to develop extensive business interests. He is also thought to be close to some government-linked tycoons controlling lucrative sectors of the Armenian economy.
Gagik Khachatrian, the controversial head of the State Revenue Committee (SRC), was also present at the weekend meeting with Abrahamian. According to a statement by the Armenian government’s press office, Khachatrian announced that his agency has drafted legal amendments aimed at improving tax administration and cutting a key tax levied from small and medium-sized enterprises (SMEs). The leaders of the Armenian Union of Industrialists and Entrepreneurs reacted positively to the proposed changes, said the statement.
Vazgen Safarian, who leads a smaller business group, said he is encouraged by Abrahamian’s pledges and hopes that the new premier can utilize his in-depth knowledge of business. “We will seize upon the prime minister’s statements and keep reminding him of his promises,” Safarian told RFE/RL’s Armenian service (Azatutyun.am) on Monday.
Hayk Gevorgian, a veteran economic correspondent for the “Haykakan Zhamanak” daily, was far more skeptical. “Hovik Abrahamian’s government will take some steps but they will be insignificant and hesitant and have elements of populism. They won’t radically change the state of the economy,” claimed Gevorgian.
“The main problem facing businesses in Armenia is not the heaviness of the tax burden but its uneven distribution,” he said of the promised tax cut. “That is, there are privileged and non-privileged entrepreneurs.”