State Revenue Committee to conduct research in case of increase of prices by supermarkets
YEREVAN, JUNE 1, ARMENPRESS. The State Revenue Committee (SRC) has no function over the pricing, SRC Chairman Davit Ananyan told reporters after today’s Cabinet session, reports Armenpress.
Asked whether the Yerevan City and the remaining supermarkets may start the practice of paying the Value Added Tax, and whether in that case the prices will drastically increase, the SRC Chairman stated: “I have also heard similar assessments. Vahram Baghdasaryan [head of the RPA faction] has also stated that previously some agreements were reached to avoid that so that there wouldn’t be 50-60% increase in prices. But the problem is very simple: if we state that the economic entities should operate within the law, it means that the supermarket selling agricultural and meat products should pay its tax with its full volume”.
He said if there is a 50-60% increase in prices in case of coming to the legal field, it would mean that the remaining small shops will be more competitive within the turnover tax.
“Supermarkets once thought that they should compete also with the small and medium businesses in their neighborhood, by this ignoring the scale effect. It is not so. We, as a State Revenue Committee, think that if prices increase, we will just conduct research to be convinced on to what extent the price increase is justified or credible. If it turns out that the transition to such tax field can cause such pricing, we didn’t see any problem. The SRC should have nothing to do with any process linked with pricing. If we work exclusively within the law and see that it causes problems and there is a need to revise the law, we can cooperate with the finance ministry by such proposals in order to change the legislation. As long as the law is in action, be it good or bad, all have to operate within that law”, Davit Ananyan said.
As part of anticorruption campaign the National Security Service of Armenia has exposed tax evasion mechanisms developed by the largest business entities of Armenia. The mechanism is based on the registration of hundreds of individual enterprises that are in fact engaged in false entrepreneurship. According to the preliminary data, “Alex Holding” LTD, being a accompany that pays value added tax, reached an agreement with the former leadership of the State Revenue Committee (SRC) of Armenia at the end of 2016 to implement the realization of agricultural products bought from farmers in the supermarket chain “Yerevan city” under the name of different individual enterprises the annual turnover of which does not exceed 115 million AMD. This gave “Alex Holding” LTD an opportunity to pay only 2% turnover tax instead of 20% VAT and income tax. The leadership of “Alex Holding” LTD registered 461 individual enterprises at the same notary office in the name of the employees of their company and the family members of the employees. Preliminary calculations show that the total sales implemented in the name of the 461 individual enterprises has amounted over 40 billion AMD.
According to specialists, if supermarkets start paying the profit tax for agricultural goods, their prices will increase.
English – translator/editor: Aneta Harutyunyan