Nikol Pashinyan receives representatives of food processing and catering companies
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%.