YEREVAN (RFE/RL)—The Armenian government’s tax revenues rose by almost 23 percent in the first half of this year amid renewed economic growth and a declared crackdown on tax evasion, according to latest data from the Finance Ministry.
Improved tax collection translated into a sharp fall in the state budget deficit that had skyrocketed during last year’s economic recession. The first-half deficit reported by the ministry stood at 16.9 billion drams ($46 million), equivalent to 1.3 percent of Gross Domestic Product and well below the government’s full-year target.
The official figures show that the State Revenue Committee (SRC) collected 286.2 billion drams in various taxes and duties, or 11.7 percent more than was projected by the government for the six-month period. That mainly resulted from a 36 percent surge in proceeds from value-added tax (VAT), the largest source of Armenian tax revenues.
As always, roughly two-thirds of them came from imported goods and commodities taxed at the border. Even so, the Finance Ministry said domestic commerce generated most of the VAT gain. This contrasted with official statistics showing virtually zero growth in first-half of retail trade.
Revenues from corporate profit tax shrunk significantly by more than 3 percent to 43.5 billion drams. The drop suggests that the government has yet to make good on its pledge to make large companies that underreport their earnings “the number one target” of its crackdown on tax fraud. Profit tax continues to make up a small share of their contributions to the state budget.
The Armenian authorities hope to address the problem by, among other things, deploying permanent SRC “representatives” to some of the large companies suspected of tax fraud. A list of 24 such entities was approved by Prime Minister Tigran Sarkisian’s cabinet in late June. It is mostly comprised of Armenia’s leading importers of foodstuffs, alcohol, cigarettes and drugs.
In a related measure, the government has also required some 285 companies with annual revenues of over 1 billion drams to have their financial reports filed with the SRC and certified by independent auditors starting from this year.