Prime Minister Nikol Pashinyan visited the State Revenue Committee to participate in the discussion of the activity report 2023 of the Committee.
SRC President Rustam Badasyan and his deputies reported on the activities carried out during the reporting period.
In particular, the objectives and expected results of the 2021-2026 Action Plan of the government, the strategic plan for the development and improvement of the administration of SRC were reported.
First, activity report 2023 of the tax authority was presented. The State Revenue Committee secured 2 trillion 221.9 billion AMD in tax revenues in 2023, surpassing the previous year’s figure by 296 billion AMD or 15.4%. It was emphasized that the revenues of the state budget have almost doubled compared to 2017.
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According to the officials, 2023 was characterized as an effective year in the fight against the shadow economy. The target set by the Government program, according to which the tax/GDP ratio should improve by 0.5 percentage points, has been achieved at least to that extent, according to the current forecast. An increase was recorded for all types of taxes, except for royalty for natural resource use, mainly due to the international prices of metals.
It was reported that about 362.9 billion AMD were returned to taxpayers and individuals, exceeding the previous year’s figure by 100.1 billion AMD or about 38.1%. VAT refund amounted to 288.4 billion AMD, exceeding the 2022 figure by 75.4 billion AMD or 35.4%. It is noteworthy that the majority of the returned income tax is the mortgage refund. through the electronic platform, in 2023, 52 billion AMD of income tax was returned to 38,911 beneficiaries, exceeding the figure of 2022 by 42%, and the number of beneficiaries by 33%. 648.7 million transactions with a value of 12.2 trillion AMD were carried out, surpassing the previous year’s indicator by 45 million transactions and 2.1 trillion AMD. Record growth of jobs and average salary was recorded. the number of income-generating jobs in November was about 738 thousand, exceeding the previous year’s indicator by 5.2%, the average salary was 293 thousand AMD, the increase was 10.6%.
As a result of 1186 complex tax audits carried out by the tax authority during the reporting year, 38.4 billion AMD were recovered.
Referring to the fulfillment of tax obligations by businessmen, the Prime Minister noted. “We have roadside trading in different places, where there is no cash register at all. My instruction was that in all cases where our legislation implies that there should be a cash register, just approach those people and inform them that, dear citizen, you should install a cash register. And at that moment they should not take any action, they just should give that message all the time, but at a certain point they will have to take action. This is very important.
We can assume that these people will pay 2 thousand AMD in tax in a year, but I want to remind you of our discussions on real estate tax. in the past, there were real estates that were exempted from tax at all. I asked why they are exempted from tax, and I was told that if we calculate the tax, it will amount 50 AMD a year. If it will be 50 AMD, let it be 50 AMD, because it is also culture, isn’t it? Especially, with the logic that with this tax, the state first of all takes care of the various needs of the citizen.
I say again, we need to introduce this understanding to people, we need to go in this direction. Very good, if someone has to pay 5 AMD in tax daily, let him pay 5 AMD a day. The issue is that he is a tax payer, a citizen, a subject. Introducing and instilling a tax culture is also an important task. The tax is what the citizen takes out of one pocket and puts in the other, because if he does not pay tax, if we assume that the citizen does not pay tax at all, he will have to spend a hundred times more money. Let’s assume that every citizen builds a road for himself, every citizen builds a school for himself, every citizen builds a hospital for himself, paying taxes reduces the expenses of every citizen by thousands of times. First of all, this understanding should be embraced by the people. And the attitude towards tax crimes should be changed in general. We need to strengthen the philosophical aspect of tax policy. I don’t even want to call it propaganda, I would rather call it a supply of awareness so that people understand what the tax is, what the tax is for. The tax is for having a state, noting else. If you want to have a state, you have to pay taxes, because there is no tax, there is no state.”
The Prime Minister inquired whether the dispute with car importing organizations has been resolved. “Those criminal cases, alarms, we have discussed them, I have also given a written instruction to verify and re-verify the validity of our legal positions. Have we done all that and are we convinced of the justice of our positions?” asked Nikol Pashinyan.
Responding, SRC President Rustam Badasyan said: “Mr. Prime Minister, we are sure that we have done the right thing, because we can recall several facts. They were doing imports as a natural person, then the EAEU rates were equalized, legal entities were created who do not pursue the goal of entrepreneurial activity. This is in general, that is, without taking into account the exceptions, but they consider the amount of value added tax as their profit. A highly disorderly situation had emerged. I think we have certainly presented a tough but very correct position. There are complaints, there are criminal proceedings being examined by the Investigative Committee. We are sure that if approximately 8.6 billion AMD were recovered, it is not possible that it was recovered through repression, that is, they accepted the fact of the offense committed by them and submitted a correction. And now we are focused on the fact that if suddenly there is such a value added tax debit amount that is subject to refund, we will not delay and will refund immediately.”
It was informed that a number of initiatives have been implemented aimed at increasing and expanding the quality of services provided to taxpayers.
The works and reforms implemented in the customs system in 2023 were presented. In particular, reference was made to the simplification of customs administration. It was noted that as a result of the simplification of the transit declaration process, instead of submitting a transit declaration for each unit of collective cargo, it is now possible to submit a single declaration for the entire cargo. As a result, according to the SRC, the time spent on the preparation of the transit declaration was reduced by around 40%. During the previous year, the preliminary customs declaration system was also improved, in particular, in order to expand the range of users of this system, the criteria for the release of goods from border customs points were revised. In particular, if until January 1, 2023 the system could be used by those taxpayers whose value of imported goods during the previous 365 days was at least 150 million AMD and 50 percent of which was determined by the 1st method of determining the customs value, then from January 1, 2023, the threshold of 150 million AMD was removed. As a result, during 2023, the cases of preliminary declaration increased from 2,284 to 6,685 compared to the previous year, that is, they increased almost 3 times.
And within the scope of ensuring the continuity of the implementation of the “One Stop, One Window” principle, the “Permit Documents” system was fully introduced in 2023, which makes it possible to obtain all permits from the authorized bodies in the import or export process through one platform, electronically, without visiting the authorized bodies. As a result, in 2023 91,810 permit documents were provided through the system (771 in 2022), which exceeds the number of 2022 by 91039 or 119 times.
It was reported that on the initiative of SRC and by the decision of the Government, the requirements for temporary storage warehouses and customs warehouses were revised. It is planned that the warehouses should have a number of electronic systems accessible to the information base of the customs body. The new structure of the customs body and the recruitment process were also presented.
Referring to the modernization plans of the border checkpoints, it was informed that in 2023 the reconstruction of the Meghri checkpoint, as well as the capital repair of the Bagratashen checkpoint started. The construction works of the Margara crossing point have been completed, and the Gogavan crossing point is also under repair.
Then the works carried out in the fields of information technology and international cooperation were presented. Among the achievements in the field of digitization, the initiatives implemented in the direction of artificial intelligence and machine learning, as well as the introduction and expansion of data analysis tools, including virtual administration, were highlighted. The process of introduction of the system of universal declaration of incomes of natural persons was presented, it was reported that the programming works of the system are expected to be completed in March. A natural person submitting a declaration can receive compensation from the amount of income tax for the social expenses made for him and his family members in the fields of education and health.
In parallel, a number of electronic platforms were introduced and improved in the tax and customs authorities, including the unified database of customs offenses, the system of post-clearance checks, the notification system, the new e-invoicing system, where the most convenient tools for issuing billing documents have been created. Last year, the State Revenue Committee received international certification of the ISO/IEC 27001-2013 standard “Information Security Management Systems”.
In the direction of international cooperation, important achievements were also recorded, in particular, Armenia joined the new international standard developed by the OECD for the automatic exchange of information on crypto-assets, as well as the system for the automatic exchange of financial accounts. the exchange of information between tax authorities will be carried out from 2025. Armenia also assumed the co-chairmanship of the Asian Initiative in 2024-2026.
Indicators of the performance of the SRC administration and their dynamics, programs aimed at improving taxpayer discipline, measures to improve legislative regulation were presented. It was reported that for the second year in a row, a survey was conducted among taxpayers to assess satisfaction with the activities of the State Revenue Committee, in which 886 organizations (private entrepreneurs) and independent taxpayers (individuals) took part. Based on the results, 87.2% of survey participants positively assessed the activities of the tax authority, 78.0% positively assessed the activities of the customs authority, 84.4% of participants positively assessed the activities of the State Revenue Committee.
It was also reported that over the past year the automated system for risk management and assessment of taxpayers subject to audit has been improved. For the first time, the annual audit program was prepared using artificial intelligence and machine learning tools. Based on best international experience, the State Revenue Committee has implemented a system for managing tax and customs disciplinary risks, which is constantly being improved. The institution of a law-abiding taxpayer is also constantly being improved. In 2023, a law-abiding taxpayer certificate was issued to 81 entities. At the same time, new decisions have been made to implement soft administration by the customs authority in relation to taxpayers who have a certificate of law-abiding taxpayers.
The works carried out by the Department of Investigation and Operational Search in 2023 were presented. As a result of operational-investigative measures undertaken during the previous year, as well as procedural actions, a number of cases of under-declaration of sales turnovers were revealed, as a result of which 19.2 billion AMD was recovered to the state budget.
As part of the fight against smuggling, in 2023 compared to 2022, the Anti-Smuggling Department ensured a dynamic increase in the detection of drug trafficking. A total of 393 cases of smuggling were detected, and in 2022 – 351 cases.
In the tax and customs systems, the process of recruiting, training and staffing continues with the new mechanism of integrity verification. As a result of studying the integrity of customs officers, 77 customs officers failed to pass the integrity interview stage. And based on the results of 57 internal audits in 2023, 55 employees faced various types of disciplinary responsibility, 4 employees were dismissed from service.
Upcoming programs were also presented. In particular, reference was made to the improvement of tax discipline (judicial practice, expenditure documentation, transfer pricing), expansion of information sources (automatic exchange of financial accounts, crypto-assets), introduction of new procedures for risk system and international tax risks, and measures aimed at international cooperation, as well as mechanisms for improving the incentive system based on good work.
INFORMATION AND PUBLIC RELATIONS DEPARTMENT OF THE OFFICE OF THE PRIME MINISTER OF THE REPUBLIC OF ARMENIA
