Hundreds of market traders demonstrated in Yerevan on Tuesday to demand the repeal of new government rules meant to end tax evasion among larger businesses selling goods to them.
A government bill approved by the Armenian parliament recently reduced from 3.5 percent to just 1 percent a single turnover tax levied from small businesses with an annual revenue of up to 58 million drams ($140,000). But it also requires those entities to prove the volume of their turnover with more receipts and other financial documents. Failure to submit them to tax authorities may result in hefty fines.
The latter provision is what prompted several hundred small traders selling agricultural products and consumer goods in markets to rally outside Prime Minister Hovik Abrahamian’s office in Yerevan. They said that they will have trouble complying with the measure, effective from October 1, because their wholesale suppliers are reluctant to properly certify their transactions with receipts.
Abrahamian came out of the building and briefly addressed the angry protesters before meeting with a group of their representatives indoors. “We are asking you not to enforce this new law and stick to the old law,” one of them told him at the meeting open to media.
Abrahamian argued that the main target of the new legislation is large importers of goods that have long been suspected of underreporting their earnings. “You have become a platform for large importers cheating the state,” he said.
“If you want to bring large entities into the tax field why don’t you do that not through us?” countered another, female trader. “Our livelihoods depend on large importers. You are turning us against them and stripping us of our income,” she said.
Abrahamian responded by assuring her and her colleagues that tax officials will not be fining small traders en masse in their planned crackdown on importers. He also offered the protesters to present their arguments and proposals to the Armenian government in writing.
The protest leaders came away dissatisfied, however, leading the crowd waiting outside to block an adjacent street in downtown Yerevan. Riot police used force to unblock it shortly afterwards. The traders said they will again rally in the same location on Thursday during a weekly session of Abrahamian’s cabinet.
The turnover tax was introduced by the government of Abrahamian’s predecessor, Tigran Sarkisian, with the aim of simplifying taxation for small businesses. According to the Armenian Finance Ministry, more than 55,000 firms and individual entrepreneurs are eligible for it. Around 10,000 of them work in retail markets across the country.
Abrahamian declared the fight against widespread tax evasion a top priority of his government after being appointed prime minister in April. He gave more than 100 wealthy entrepreneurs until July 1 to stop underreporting their earnings to face tougher government action.
Abrahamian’s government has so far failed to significantly increase its tax revenue. The premier implied last month that he needs more time to tackle the problem.