The recently appointed head of the State Revenue Committee (SRC) pledged on Thursday to crack down on what he called widespread tax evasion in Armenia and remove many corrupt officials from the tax collection agency.
Vartan Harutiunian said most of the county’s 521 largest corporate taxpayers engage in tax fraud that costs the state budget some 42.5 billion drams ($90 million) in revenue annually. He said they hide almost have of their taxable earnings.
“According to our monitoring, there is tax evasion in these 296 enterprises,” he told a news conference. “We are going to bring them into the tax field as a result of [better] tax administration or, if that doesn’t work, through strict measures.”
Harutiunian was careful not to accuse his predecessors of having turned a blind eye to tax evasion. He said he will not be looking into “what happened in the SRC in the past.”
Corruption within the Armenian customs and tax services has long been endemic. Many senior SRC officials are thought to have extensive business interests because of that.
Harutiunian said he plans to to fire “corrupt and unhealthy elements” from the SRC and hire at least 2,000 new tax officials. He cautioned, however, that the latter will be paid only between 50,000 and 70,000 drams a month.
“I expect to find between 2,000 and 2,500 patriotic people in our country who will be motivated by a desire to change something in the country and build a better future for their children, rather than just to receive a salary,” added the official.
A figure close to Prime Minister Karen Karapetian, Harutiunian was named to run the SRC in early October following a government reshuffle initiated by President Serzh Sarkisian. He until then managed Armenia’s national gas distribution network owned by Russia’s Gazprom energy giant. Karapetian was the Gazprom-Armenia company’s chief executive from 2001-2010.
A source of frequent complaints by Armenian businesspeople, the SRC has a strong influence on the country’s business environment.
Karapetian has repeatedly vowed to improve the investment climate since he was appointed as prime minister on September 13. Meeting with the leadership of a leading Armenian business association on September 28, he said tackling the informal sector of the economy is critical for addressing Armenia’s economic problems.
Harutiunian confirmed on Thursday that the SRC will fail to meet its tax revenue target set by the 2016 state budget. He said the shortfall will total roughly 60 billion drams ($125 million). He blamed it on slower-than-expected economic growth.