ARMENIAN TAX COLLECTION ON TRACK
By Atom Markarian

Radio Liberty, Czech Rep
April 18 2006

Armenian tax authorities reported on Tuesday an almost 23 percent
increase in the amount of taxes collected by them in the first
quarter of this year, putting the government on track to meet its
2006 budgetary targets.

Felix Tsolakian, head of the State Taxation Service (STS), told
President Robert Kocharian that his agency’s January-March revenues
totaled 42.3 billion drams ($94 million).

A statement by Kocharian’s office said that particularly significant
has been a rise in proceeds from the collection of corporate and
individual income taxes which have long been grossly underreported in
Armenia. It cited Tsolakian as saying that STS is currently tracking
suspected delinquent companies whose “paid taxes are not commensurate
with the scale of their activities.” No details were reported.

The Armenian customs similarly said earlier this month that it has met
its first-quarter revenue target. Both the State Customs Committee and
STS are under strong pressure to ensure the successful execution of the
government’s record-high budget for 2006 which is due to pass the $1
billion mark for the first time in Armenia’s post-Soviet history. It
calls for a 22 percent increase in the still modest public spending.

The tax and customs bodies had already boosted their revenues by 22
percent to 304 billion drams last year. The sum is worth only 14.4
percent of Armenia’s 2005 Gross Domestic Product. The proportion is
very low even by ex-Soviet standards and highlights the continuing
large scale of tax evasion in the country.

One of the ways of combating the practice was supposed to be the
mandatory declaration by state officials of their incomes and
other assets, which was introduced several years ago. According to
Tsolakian’s deputy Armen Alaverdian, as many as 49,000 of them filed
income declaration to STS before the April 15 deadline.

Alaverdian admitted that the procedure has made little difference as
many of the high-level officials grossly underreport their assets. He
complained that Armenia’s law on financial disclosure does not envisage
tough sanctions against such individuals.

The problem was also discussed during Kocharian’s meeting with
Tsolakian. The presidential statement said Kocharian stressed the
need to “further clarify mechanisms” for punishing those officials
who file false financial statements.