Doing business in Armenia has become easier over the past year thanks to tax and other regulatory reforms carried out by its government, the World Bank said in an annual global survey released on Thursday.
The bank’s “Doing Business 2012” report rates 183 economies of on ten aspects of government regulation of business, including taxation and the ease of starting and closing businesses and registering property.
Armenia is 55th in the latest rankings, having risen by six places in accordance with changed methodology and a new indicator added by the authors of the survey.
“Armenia is the only country among 183 economies that implemented as many as five regulatory and institutional reforms between June 2010 and May 2011,” the World Bank explained in a statement. “Specifically, the country reformed in the following areas of business regulation: Starting a business, Dealing with construction permits, Getting credit (credit information), Paying taxes, Resolving insolvency.”
The survey says that the authorities in Yerevan simplified taxation procedures by reducing from 50 to 34 the number of annual payments for corporate income, property, and land taxes as well as social security contributions. It also points to the introduction in January 2011 of mandatory electronic filing and payment for major taxes.
Even so, Armenia ranked 153rd in terms of the quality of tax administration. The bank argued that Armenian firms still spend an average of 500 hours a year on dealings with tax and customs officials.
The latter have long been accused of harassing businesses to meet their revenue targets at any cost and/or extort kickbacks. Armenian tax authorities are also suspected of giving preferential treatment to large and lucrative firms controlled by government-linked entrepreneurs.
The Armenian government and Prime Minister Tigran Sarkisian in particular have repeatedly declared improved tax administration a top priority. “The tax and customs administration is our most fundamental challenge,” Sarkisian told his ministers last March.
“If we manage to considerably improve it in 2011, then our position in the Doing Business report will also improve considerably,” he said.
Armenia also continues to score rather poorly on investor protection and contract enforcement, a fact reflecting a weak rule of law in the country. It in turn results, in large measure, from the Armenian judiciary’s long-running subservience to the government and law-enforcement bodies.
As was the case in the previous surveys, Armenia fares much better in other areas of business regulation, notably property registration. According to the World Bank, only four other nations have more simple legal procedures for registering property.
Armenia also occupies 10th place in the bank’s rankings on the ease of starting up a business. The survey says that it normally takes eight days and three different procedures to register a company there.
“Armenia made starting a business easier by establishing a one-stop shop that merged the procedures for name reservation, business registration, and obtaining a tax identification number and by allowing for online company registration,” it says.