Kocharian Forms New Body To Tackle Tax Fraud

Armenialiberty.org, Armenia - Sep 18, 2007
By Emil Danielyan

Just days after lambasting tax authorities, President Robert Kocharian has set up an ad hoc commission tasked with helping to ensure that the Armenian government’s tax revenues reach the level of “civilized countries.”

Kocharian’s office said late Monday that the inter-agency commission will be headed by the chief of the State Tax Service (STS), Vahram Barseghian, and comprise officials from the presidential administration and the State Customs Committee (SCC). Representatives of the police, the National Security Service and the Prosecutor-General’s Office will also sit on the body.

A statement by the presidential press service said its main function will be to crack down on widespread tax fraud and curtail the huge informal sector of the Armenian economy. It said the commission held its first meeting, chaired by Kocharian, earlier on Monday.

Kocharian was cited as demanding a “serious fight against shadowy economic activities.” He reminded commission members that Armenian tax revenues still make up a disproportionately low share of Gross Domestic Product despite having risen considerably in recent years. They must strive to make sure that Armenia’s tax/GDP ratio comes close to that of “civilized countries,” he added, according to the statement.

The proportion was below 14 percent last year and will at best reach 15 percent this year, one of the lowest indicators in the former Soviet Union.

“The amount of taxes we collect is small,” Prime Minister Serzh Sarkisian said late last week. “To begin with, we must first raise it to the level of medium-income countries. This will be one of my most important tasks.”

Kocharian set up the special body five days after accusing the STS and the SCC of failing to combat tax evasion, tolerating corruption within their ranks and giving privileged treatment to some businessmen. He told the two bodies to suggest concrete ways of addressing these problems and instructed law-enforcement authorities to “identify and strictly punish tax and customs officials engaged in favoritism.”

Many of Armenia’s wealthiest entrepreneurs are believed to grossly underreport their earnings, ranking suspiciously low on the lists of leading corporate taxpayers regularly released by the STS. Some of the so-called “oligarchs” have close ties with Kocharian and Sarkisian.

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