By Atom MarkarianRepresentatives of some of Armenia’s business associations alleged on Tuesday widespread harassment of small- and medium-sized firms resulting from the government’s ongoing crackdown on tax evasion. They accused tax officials of mainly targeting businesses not controlled or owned by them.
The complaints were voiced at a meeting of a consultative body advising parliament speaker Artur Baghdasarian on ways to support a sector that accounts for the biggest share of economic activity in Armenia.
“I am concerned about the fact that not everybody is equal when it comes to taxation. They always target small firms in the first instance,” a member of the council, Ara Gevorgian, said after the meeting.
Maxim Voskanian, another council member who heads the Armenian Union of Entrepreneurs, used stronger language to denounce the crackdown. “Instead of taxing their relatives and friends, they began a savage harassment of businesses already operating in the legal field,” he charged.
Voskanian was indirectly referring to President Robert Kocharian’s calls for the tax officials to stop giving privileged treatment to their cronies. “I am sure that if you start from yourself, from taxing your friends and relatives, you will not let others stay beyond the taxation field,” Kocharian told employees of the State Taxation Service on January 11.
The campaign against tax fraud is meant to focus on the widespread underreporting of the number of employees and the amount of their salaries by employers. The Armenian Ministry of Labor and Social Affairs estimates that as many as 400,000 workers are affected by the practice.
The deputy head of the State Taxation Service, Armen Alaverdian, said large-scale financial inspections that followed Kocharian’s instructions have already born fruit. He said his agency increased its proceeds from the collection of workers’ social security taxes, used for paying pensions, by as much as 50 percent last month. “Business people are offered to stop registering one out of ten employees and to declare the real size of their salaries,” he said.
But representatives of small business claim that the tax authorities are simply forcing companies that have no powerful government patrons to increase the number of people listed on their payroll without bothering to check their books.