Chief Prosecutor Cracks Down on Tax Evasion

YEREVAN (RFE/RL)–Prosecutor-General Aghvan Hovsepian called for a drastic toughening of punishment for widespread tax evasion in Armenia–saying existing sanctions are "absurdly soft."

"Based on Armenia’s criminal code–there is a maximum two year prison sentence for tax evasion," he told reporters. "I would say that this is an absurd punishment–a very soft one."

Hovsepian said his agency will petition the Armenian government to push parliament to set the maximum jail term for such offenses at 10 years. The existing criminal legislation creates a "serious problem" for the prosecutors investigating fiscal fraud–he added.

The current cabinet’s tax revenues equaled less than 15 percent of the country’s Gross Domestic Product last year.

Even the most lucrative of Armenian businesses routinely post suspicious financial losses in what many analysts see as an easy way to evade the 20 percent taxation on profits. Armenia’s enterprises have claimed as much as 200 billion drams ($376 million) in aggregate losses in 2003–despite a record-high rate of economic growth.

Hovsepian revealed that an unidentified person was recently prosecuted for and convicted by a court of tax fraud totaling 7 billion drams. He complained that the man got off with a short sentence and was freed in the courtroom because of the time he had spent in pre-trial detention.

Many businesspeople–he said–prefer spending several months in jail to paying up.

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