Armenia’s government announced that it is reconsidering its proposal to impose stricter criminal penalties for tax violations after receiving criticism from entreprenuers.
This has compelled the Armenian tax authority, the State Revenue Committee (SRC), to abolish Article 290, Paragraph 5 of the Criminal Code. This draft legislation proposed an amendment that removes the current provision permitting tax-evading businesses to evade criminal charges by simply settling their owed amounts. The new proposal suggests a three-year prison sentence for violations exceeding AMD 10 million (about USD 25,500).
Earlier, the SRC chief Rustam Badasian expressed his support for the proposed legislation.
“Tax discipline should be raised to a new level,” SRC chief Rustam Badasian said during a cabinet meeting on 15 August 2024. “For example, if two businesses operate in the same market, one fully compliant with tax regulations and the other evading taxes, the SRC might discover and prove only a portion of the evasion. The evading businessman can then pay the amount and avoid criminal responsibility. How fair is this to the compliant taxpayer?”
Badasian’s views have led some business leaders to view the SRC’s new proposal as a significant risk to entrepreneurship in Armenia, potentially serving as a mechanism to stifle business growth.
On 11 September 2024, the Deputy Chairman of the Standing Committee on Economic Affairs of the National Assembly stated that the draft would not be adopted in its current form and several alternative measures would be considered.
