Monday, January 14 2019 11:16

ArmInfo. Acting Prime Minister Nikol Pashinyan today received representatives of local food processing and catering companies. As the press service of Prime  Minister's Office informs addressing the guests, Nikol Pashinyan  stated, in part:

"We have come together to discuss a problem which  has been the focus of media attention in recent months, I mean the  tax regulations applicable in the field of public catering. Before  the discussion, I would like to draw your attention to the following  formula that we have offered to the public at large and the business  people: get richer and enrich others. This formula is very important  to us because there is not a single segment in our business community  that ignores the second part of this formula and focuses on the first  part.

"Frankly speaking, people often ask us why the roads are in poor  condition, the pensions are low, and so on. But no one asks how all  this should be implemented. This can be realized mediating greater  state budget revenues, efficient use of public funds and the  elimination of corruption. We must work harder on these components,  but can we assume that positive impulses are perceived equally and  evenly in society?", the Acting Prime Minister wondered.

"We initially proceeded from this assumption, but when I personally  go to a store to buy something, and the shop assistant fails to issue  a check, I think perhaps the person who saw the Acting Prime Minister  got confused. But when I ask him to give me a check and when the  process of connecting the cash-register takes about 10 minutes, I  understand that the shop assistant does not even have an idea of how  it works, I understand that unfortunately, in most cases our message  is understood the old way.

Now, as they do not have to pay bribes to different corrupt  functionaries, they consider this a good opportunity to ignore the  second part of the aforementioned formula. They think that the  government may ignore the other part of the message, and since it is  consistently fighting corruption, they are entitled to forget about  the cash-registers and everything connected with it.  I think this is  a very negative phenomenon. I believe that this is just another  manifestation of corruption. Should such people be appointed as a  minister or prime minister, they would plunder the country within  five minutes. Corrupt officials do not differ from those people who  only think about evasion.

However, there is another question, namely whether the applicable tax  system allows business people to get profit and get richer, that is,  to develop their business? This is our number one task.  And I want  to clearly emphasize that no legitimate question will go unanswered  as part of this logic.

If we see that the system does not provide labor and profit  incentives, and, consequently, fails to boost the budget receipts, we  will assume that we have a common problem that needs to be solved  together. Therefore, I hope that today's discussion will proceed  under this very logic.  I want to say at once that if as a result of  our discussion it turns out that fears are justified and we have  problems in this regard, we will indeed respond to these fears,  otherwise you will be the ones to address these fears."

A number of issues related to tax administration and regulations were  discussed during the discussion. The business community  representatives voiced their comments and concerns. The  representatives of the State Revenue Committee and other competent  authorities provided explanations on those issues raised at the  meeting. The need to shape a favorable tax environment and atmosphere  was emphasized on either side.  Nikol Pashinyan suggested taking up  the negotiations between the private sector and the government and  setting specific deadlines to that end. The Acting Prime Minister  stressed that the discussions will seek to achieve mutually  acceptable and beneficial tax regulation-related solutions, based on  accurate estimates and calculations.

To recall, according to the previous tax regulations, catering  facilities with an area of the visitors' service hall not more than  600 sq. Meters were taxed on preferential grounds. The rest are taxed  in a general manner. The tax code of September 2016 lowered the bar  to 100 sq.m. According to the results of studies and conversations  with representatives of the field, the government decided to  temporarily - until July 1, 2018, restore taxation on preferential  terms for catering facilities with an area of up to 600 sq.m. Already  on July 1, 2018, new tax rules came into force - the patent tax for  restaurants (tax per square meter) was replaced by a 6% VAT. On  January 1, 2019, the tax will increase to 8%, and from 2020 to 10%.  At the same time allowing the business entity to withdraw from the  obligation 6% of the documented expenses, but not less than 4% of the  turnover. Already after the new regulations came into force, Deputy  Finance Minister Arman Poghosyan told ArmInfo's correspondent that as  a result of the transfer of catering facilities from the simplified  tax regime to the turnover tax regulation field, consumers should not  expect an increase in prices. "Despite the fact that economic  entities of the sphere are talking about a possible increase in  prices, it seems to me that prices will not be increased. Our  research shows that the field functions with high profitability.  In  this case, in terms of paying taxes by 2-2.5% more due to the revenue  received, it should not lead to an increase in prices, "he said.  Nevertheless, at the end of November 2018, the Restaurant Union of  Armenia announced that they are ready to close their doors in protest  for one day. Perhaps, if they do not come to a consensus with the  government, the doors of the public catering will be closed on the  20th of January. As restaurateurs say, they cannot fix their  expenses, since tax deductions can be made only with certified  invoices procurement. The association also demands not to initiate  tax rate changes in the next five years.  According to restaurateurs,  the profitability of their business is 10-15%, and not at all 30%, as  officials in tax policy mistakenly believe. on domestic consumption,  on the development of tourism, in particular - gastrotourism.They  propose to establish a threshold for a turnover tax of not more than  3%.