Government Targets Markets in Effort to Curb Tax Evasion

YEREVAN (RFE/RL)–Prime Minister Tigran Sargsyan announced on Tuesday a government crackdown on marketplaces across Armenia which he said account for much of the country’s retail trade and grossly evade taxes.

The measure is the latest in a series of government measures meant to combat widespread tax evasion in the country.

Sargsyan said earlier that the abundance of retails markets, where traders enjoy preferential forms of taxation and do not have to follow accounting rules mandatory for other businesses, is a major source of tax fraud. That, he said, significantly reduces proceeds from the collection of value-added tax (VAT), the number one source of the Armenian government’s tax revenues.

The Armenian premier unveiled a government plan to address the “extremely serious problem” at a public meeting on Tuesday with the owners and managers of several dozen major markets that mostly sell clothing, electronics items and other household goods. “We can not fight against the shadow economy as long as 80 percent of retail trade in the Republic of Armenia is not taxed,” he said.

At the heart of the plan is the mandatory purchase and use of cash registers. Market administrations are supposed to ensure that all traders input their sales in the devices starting from October 1 or face heavy fines. They must sign relevant contracts with the traders by August 15.

“Sanctions for failure to comply with these rules will be substantially toughened,” warned Sargsyan. “This situation can not be tolerated anymore.”

Previous Armenian governmen’s already attempted to introduce cash registers in the markets in the past, but eventually backed away in the face of angry street protests by traders. Sarkisian made clear that his cabinet would not bow to such pressure.

Simon Aghazarian, the manager of a similar market in the city’s Malatia-Sebastia district, said the measure will hit hard many of his traders. “It is a duty to implement the decisions of our government,” he told RFE/RL. “But I think not all the people will agree. I’m afraid that many of them will close shop.”

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