A new survey from IFC, a member of the World Bank Group, identifies the most costly and complicated tax procedures for Armenian companies and recommends reforms to simplify taxation and improve the overall business environment in Armenia.
IFC’s Tax Compliance Cost Survey finds that the heaviest tax compliance burden falls on small and medium enterprises. For example, companies with turnover of up to 5 mln drams (around $14,000) spent some 17.5 percent of that complying with tax regulations, whereas larger companies with turnover of over 58.35 mln drams (around $160,000) spent only 0.4 percent. The survey shows that trade-oriented businesses have to undergo the most time-intensive procedures, the press service of IFC Yerevan office reported.
“The IFC survey will help Armenia's government pinpoint areas for improvement,” said Thomas Lubeck, IFC Regional Head for the Caucasus. “IFC experts are now working on recommendations to help the government improve the business environment, especially for small enterprises with the heaviest tax compliance burden.”
IFC surveyed 1,000 companies and sole proprietors throughout Armenia on questions related to fiscal year 2009. Tax compliance cost does not refer to the tax actually paid, but rather the administrative costs of paying taxes, such as the time that accountants spend on calculating taxes, producing tax returns, visiting regional tax and local government offices, as well as time spent on audits, and expenses for accounting software.
IFC’s Armenia Regulatory Simplification – Doing Business Reform Project is run in partnership with the Austrian Ministry of Finance, the Netherlands Ministry for Development Cooperation, the Luxemburg Ministry of Finance, and the Consortium of Commercial Promotion of Catalonia.
