The Armenian government’s tax revenue increased but still narrowly fell short of a government target in the first half of this year despite continued economic growth in the country, according to official statistics.
The State Revenue Committee (SRC) said on Wednesday that it collected 511.3 billion drams ($1.1 billion) in various taxes and duties in that period, up by 2.2 percent year on year but down from almost 520 billion drams envisaged by Armenia’s 2016 state budget.
In a statement, the SRC quoted its first deputy head, Armen Alaverdian, as attributing the shortfall to a drop in customs duties collected from imported goods and especially cars.
Alaverdian singled out vehicles imported from Russia and other Eurasian Economic Union (EEU) member states. In March, the Armenian authorities abolished a 20 percent value-added tax on those vehicles under pressure from the EEU’s Moscow-based executive body.
According to the National Statistical Service (NSS), overall imports of goods and commodities to Armenia were largely flat in January-May 2016. By contrast, Armenian exports rose by 20 percent on the back of sharp increases in shipments of Armenian brandy and agricultural products to Russia.
The stagnant imports are consistent with a 4 percent decrease in the volume of retail trade registered by the NSS in the five-month period. That in turn seems to have resulted from a continuing fall in remittances from Armenians working abroad and Russia in particular.
Nevertheless, the government maintains that economic growth in the country accelerated this year. It says that the Armenian economy expanded by 4.4 percent in the first quarter of 2016 thanks to major gains in manufacturing and services. It recorded a growth rate of 3 percent in 2015.
Both the government and Western lending institutions forecast earlier that full-year growth will slow to roughly 2 percent in 2016 due to lingering effects of a recession in Russia
The SRC figures show that Armenia’ 517 largest companies accounted for almost 55 percent of the government’s first-half tax revenue. The total amount of taxes paid by them rose by around 8 percent.
Alaverdian said the tax authorities applied “softer administration” to small and medium-sized firms in the same period. In particular, he said, they decreased the number of tax audits of such firms.
The government’s tax revenue has increased considerably in the past several years. But it is still equivalent to only one-fifth of Gross Domestic Product, a low figure even by ex-Soviet standards. The modest proportion stems, in large measure, from widespread tax evasion, corruption and privileged treatment of wealthy entrepreneurs linked to the government.