It’s not a secret that the entrepreneurs are dissatisfied by the Tax Service and the Tax Service is dissatisfied by the entrepreneurs. The first mentioned ones complain about high taxes, corruption, frequent change of laws.
And the Tax Service is trying to prove that they are doing everything right as though they inform about the changes of laws on time and if the entrepreneurs are not following the official information it is their fault. This time the complaints were expressed because of mandatory social payments. The ones, who complained are entrepreneurs, who are used to working by simplified tax. Thus the simplified tax for them is replaced by VAT and income tax. The entrepreneurs working by this type of tax pay about 3.5% tax. Besides that the entrepreneurs were also paying the mandatory social fees – 5000 AMD and a bit more.
When submitting their fiscal reports of 2006 the entrepreneurs have notices that they have a great amount of social obligations, which in certain cases surpass $1000. In past their annual social obligations were not more than 60.000 AMD. The tricky thing is that in 2005 the law on simplified tax was changed. According to Article 4 of that code the social obligations have been increased and must be paid after the payment of the income tax. Meanwhile on November 11, 2005 the law on social payments was also changed and new fees were added.
These changes have become acting since January 1, 2006. In order to make it clearer let us bring a concrete example. Entrepreneur Poghos is in business, he has a stall. He daily shows a 20.000 AMD circulation. For a month it is 600.000. He monthly pays 5000 AMD for social fees. Poghos is calm because he knows that he has paid the taxes. And then comes the shocking question, “Poghos, how much was your actual circulation? The income for Poghos is gained by buying stuff from wholesale and selling it in retail. The problem is that Poghos doesn’t have any documents for that. And if he doesn’t have documents it means that the monthly 60o.000 cannot be reduced. The social payment of this business will annually make 500.000 AMD. The Tax Service doesn’t deny that there is a problem like this and that businessmen are in trouble but they are sure that it’s the fault of businessmen.”
Deputy-head of the Tax Service, Armen Alaverdyan says, “These laws were adopted to make the businessmen understand that the best way to work is to show documents and have evidence. If they had those documents we’d be able to calculate and I’m sure the social payments would be so much less for them than now when they don’t have documents filed within the year.” According to Alaverdyan a great part of dozens of thousands of entrepreneurs have followed the law and don’t complain. They compiled documents and now they don’t have problems. “Another part of businessmen didn’t do it and bring reason that they were not aware of the change and claim that this law that has been acting since January 2006 has made their lives harder,” says Alaverdyan and ensures that this law will help the businessmen be more transparent.
People say that you get scared once you witness what’s scary. This means that the owners of stores will probably stop buying wholesale products without required documents. Or at least he/she will try to accumulate certain papers within the year. But what’s going to happen to the ones, who made a mistake this year? Will they be forgiven or will have to pay the mad amount of money? It turns out that they are not going to be forgiven.