IMPROVEMENT OF TAXATION SYSTEM
FOR SMALL BUSINESSES IN ARMENIA


According to the great majority of Armenian small entrepreneurs the main obstacles and harms are taxation, stocktaking and reporting systems. These are the main reasons for bankruptcy, “shadow economy and fetch a compass to avoid taxation. Thus the strategy of taxation for small enterprises must be oriented at the legalization of the incomes and not only at fiscal control. This approach will allow increasing the number of legally functioning entities in small business sector and creating transparent and sustainable business environment. The rational and favorable tax policy for the small enterprises in its turn will increase the state budget revenues from that business sector.
In this regard, it is necessary to elaborate an alternative system of taxation for small businesses. 
The FSMB’s project titled “IMPROVEMENT OF TAXATION SYSTEM FOR SMALL BUSINESSES IN ARMENIA” was aimed at improving the tax legislation by elaborating changes and amendments in the law on profits tax, which will foster the development of small size entrepreneurship in our country, and initiating a campaign by consolidating the efforts of business community members and business associations for the adoption of those changes by the National Assembly of Armenia. 
The project has been implemented in close partnership with the “Armenian Young Lawyers’ Association” NGO, and with the support of the National Anti-Corruption Coalition of Non-Governmental Organizations, “National Center for Small and Medium Entrepreneurship Development” and SME Department of the Ministry of Trade and Economic Development of RA. 
Within the frame of the project it has been proposed the package of changes and amendments aimed to get the exemption for newly established small-size enterprises from profit tax to save monies for business development. The changes are suggested for definite period (2 or 5 years). In order to prevent the possible abuses it has been stated the mechanism of obligatory fiscal checking of veritable reason for enterprise liquidation. If the liquidation is not because of lack of profit the profit tax for whole this period must be paid off. 
During the project implementation the seminars aimed at involving the business community into the draft document preparation process have been organized and conducted in Yerevan and Lori, Shirak, Vayots Dzor, Kotayk, Gegharkunik and Armavir marzes for local business associations and representatives of small business. The recommendations and comments of seminar participants have been taken into account for the follow-up revision of the draft document. The representatives of mass media have provided the media coverage of the events. 
It has been also designed the appeal-address to the President, National Assembly, Government, NGOs and Mass Media of RA to take into account the opinion of business community and support the adoption of proposed changes and amendments in the law on profits tax (The downloadable documents are available in our Info Center).











During round table discussions