Don’t Tax the Green in Armenia

Arpi-Solar-4a
Solar panels manufactured by Armenia-based Arpi Solar

Solar panels manufactured by Armenia-based Arpi Solar

BY GOR MKRTCHIAN

Armenia’s collection of renewable energy firms, among them Arpi Solar, Shtigen LLC, Redinet CJSC, and Solaron, are all operating under a terrible burden that doesn’t have to exist: taxation. In 2017, Armenia took the wonderful step of removing import taxes on electric vehicles, but why is the renewable energy industry taxed at all? When you tax something, you get less of it, and we need more energy, not less. Yet, Armenia’s renewable energy firms face property, income, payroll, social security, corporate, sales, and import taxes.

Given Armenia’s lack of confirmed coal, oil, or natural gas reserves, the nation is dependent on fuel imports from Russia and Iran, and blockaded by its two other neighbors. This means it’s important to insulate against geopolitical risk. If energy imports from Russia and Iran were for one reason or another to cease, the results would be dire. The capability of producing energy domestically may prove vital to Armenia’s future and independence.

A total tax-exemption would not only mean the growth of existing firms, but also an expansion of the industry altogether, with new entrants suddenly finding the sector profitable thanks to reduced participation costs. The energy sector would be more vibrant and competitive, and produce more domestic energy at a lower price. As a result, consumers would adopt its use in growing numbers.

The economy would experience a major windfall in the face of such a reform. With this move towards a freer market, employment opportunities would be created, and the decreased cost of energy would lead to citizens having more money left over after paying their energy bills to spend elsewhere. The positive effects would spill over into the entire economy, not only because consumers would have lower energy bills, but also because energy is the master resource. Every aspect of the modern economy requires energy: every factory, every farm, every store and every home. Thus, reducing the cost of energy would directly benefit the entire economy.

Making Armenia’s renewable energy sector totally tax-free would be an enormous boon to the country’s security and economy. The state shouldn’t wait one moment longer to implement this policy.

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2 Comments

  1. Areg Gharabegian said:

    Is there data that shows tax exemption will help expansion of the solar water heater and solar PV electricity generation installations? Until two and half years ago, there were only two companies in Armenia that were installing just solar water heaters and there was a waiting list for the installation of solar water heathers. However, since January of 2015 when net metering law became effective in Armenia, several new companies have started operation and it seems all of them are doing fine. Typically tax exemptions are for helping an industry that is important for the country and such an exemption will help them flourish. Therefore, if there is solid data that tax exemption is needed for the national security issues, then let us advocate for it.

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