“People usually don’t like paying taxes, especially when there is a feeling that they can find ways pay taxes” says deputy chief of the RA taxation department, Robert Kocharyan, answering to a question whether the budget of this year meets the requirements of the pre-election year or not. Mr. Kocharyan also said that the budget of 2007 anticipates much effort and added, “but we are not afraid of it”.
Recently the State Tax Bureau has publicized the list of the greatest taxpayers of Armenia 2006, which shows that the great taxpayers especially the monopolized ones have rapidly curtailed their tax payment. Besides that there are sectors, the taxes paid by which are so much lower compared to their development rates. Those issues originate lots of assumptions and doubts. That’s why we decided to talk about this to the Deputy head of the STB of RA, Robert Kocharyan.
– Mr. Kocharyan, do you agree with the opinion that our greatest taxpayers have paid their 2006 taxes based on the requirements of the pre-election year?
– In my opinion there is no need to see direct connection between the extra or little maid every single AMD by connecting it with the pre-election year, etc. Our system is very sensitive. That’s why whenever our society raises such issues those in fact have their influence on processes. People not always like to pay taxes especially when an environment is created by which they think they can avoid taxes. People want to wait and see and hope that perhaps after elections they’ll pay a little less. In this regard the fiscal departments of our Bureau must function more operatively to ensure that people don’t avoid taxes they must pay. When we met the President of RA in his office we received a clear order, by which the STB must not get distracted because of elections. The same was said about Budget 2007 especially considering the fact that this year’s budget anticipates more intensive work. But I can ensure you that we are not scared of the Budget.
– Certain monopolies of Armenia, mainly importers last year drastically reduced their paid taxes. How do you explain this?
– In the tax line I can say that they have increased.
– But how do you explain the fact that the two companies, which export sugar – “Salex Group” and “Flit Food” have decreased their paid taxes by 1.6 billion AMD compared to the same period of 2005?
– I wouldn’t like to give a long explanation about concrete taxpayers. That may look like an advertisement or an anti-advertisement. We gave the numbers. You may compare. It’s not excluded that some of them have opened other businesses and moved part of their money there. There is no reduction in the overall tax field. If there is someone, who had some reduction in tax payment, believe me, is now under the control and attention of the STB.
– How is it possible to reduce the customs tariffs for importers and instead raise the taxes? In the event of little importation taxes must be reduced as well, mustn’t they? Otherwise a certain contradiction is created.
– As a representative of the STB I can speak about other state bodies but only on surface.
– Year by year the number of tourists visiting Armenia is increasing. In parallel with this process new hotels are being opened. Under these circumstances, why don’t large hotels become large taxpayers?
– If you have noticed there were hotels in the list of 300 greatest taxpayers.
– Yes, but only two.
– Those hotels may benefit from all kinds of tax privileges. It’s quite possible that they have made great investments in our country, which enables them to be exempt from the VAT.
– Till when will they benefit?
– This privilege has a quite differentiated look. If said, in total, it must be over by 2009. Of course I am glad that you think that those privileges ban the completion of our budget. It creates an unequal field for our entrepreneurs. Besides that it’s very hard to definitely believe that all that money is coming from abroad. We also ask us this question and try to find an answer. I strongly believe that there is no need to give any fiscal privileges to our entrepreneurs because experience shows that it later works against us.
– Mr. Kocharyan, for the STB taxation of malls is also a very hard work. Haven’t you found any more productive methods of taxing malls? The process of applying checking machines didn’t work out any way.
– The malls work in a fixed rate. The amount of tax paid by them is quite stable.
– Don’t you think that the defined rates are lower compared to what they make in fact?
– It’s hard to prove that the mall owners in fact take more money from the tenants. Both the payer and taker provide different numbers. We also heard that more money is levied but it’s hard to prove and this issue keeps sating one of the key issues of ours.
– Mr. Kocharyan, don’t you find it strange that the “Electrical Network of Armenia” pays less tax than cigarette importer “Pares Armenia” company?
– I am surprised that you compare two businesses, which belong to totally different sectors of economy. The cigarette business anticipates more income. That’s why they pay more.
– Isn’t it true that the whole population of Armenia is using the service of the “Electrical Network of Armenia” and only maximum 35% of Armenia’s population smokes the cigarettes of “Pares Armenia”?
– Armenia has a committee on protecting competition, which is occupied by the supervision of dominant companies. If the committee finds out that any of the dominant companies overuses its privileges thy definitely punish that company.
– We say economy is growing. People have more income now and this means that the businesses of entrepreneurs are also developing however the direct taxes paid by them continue being less than their indirect taxes. Why is it so?
– Over the period of the past 2-3 years there is growth of direct taxes. If in 2004 profit tax was 32 billion AMD in 2005 it amounted to 41 billion AMD, I 2006 – 65 billion. It means that during two years indirect taxes have increased two times.