Armenian Government Withdraws Controversial Bill Targeting Tax Evading Companies

sargsyancabinetYEREVAN (RFE/RL)–The Armenian government has effectively withdrawn from parliament a controversial bill that would allow tax authorities to deploy agents in large companies suspected of tax evasion.

Under the bill, permanent “representatives” of the State Revenue Committee (SRC) would enjoy unrestricted access to companies’ facilities, financial documents and other information about their business operations.

The proposed legislation is part of the government’s long-running efforts to improve tax collection which have gained new momentum under Prime Minister Tigran Sargsyan. The latter pledged earlier this year to make large and lucrative firms “the number one target” of the ongoing crackdown on tax fraud. Many of them are owned by wealthy individuals with close ties to the government.

The package of corresponding legal amendments was introduced to the National Assembly in May, meeting with fierce resistance from not only the opposition minority but many pro-government deputies with extensive business interests. They said it would only create more breeding ground for the already widespread corruption among tax officials.

Prosperous Armenia, the second most important party in the country’s governing coalition, voiced strong opposition to the bill, as did some deputies from its senior coalition partner, the Republican Party. Officials from the World Bank and the International Monetary Fund have also expressed serious misgivings about the measure.

Consequently, the government asked the National Assembly to delay the first vote on the bill, scheduled for June 10, by 15 days. It has still not reintroduced the bill.

A government source told RFE/RL on Tuesday that the government will not initiate a fresh debate on the matter at least until the parliament’s regular autumn session that will start on September 14. In the meantime, government officials will continue their unofficial “discussions” with relevant lawmakers, said the source.

“They seem to be planning to move the issue to the autumn session,” confirmed Vartan Bostanjian, a Prosperous Armenia deputy. He said the government will likely drop the bill altogether. “They just find it inexpedient to trumpet that at the moment,” claimed Bostanjian.

According to another critic, Ara Nranian of the Armenian Revolutionary Federation, some wealthy lawmakers are now secretly lobbying for loopholes in the bill that would spare their business the permanent presence of tax agents. “The changes that the government might make as a result would further reinforce our belief that passing this bill is unacceptable,” Nranian told RFE/RL.

The ongoing global recession has resulted in a serious shortfall in the government’s budgetary revenues. The Finance Ministry said on Tuesday that the SRC collected 189.3 billion drams ($526 million) worth of taxes and customs duties in the first five months of this year, down by 19.2 percent from the same period of 2008.

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