YEREVAN (Arka)—Armenia’s Prime Minister Hovik Abrahamian announced on Thursday that he is giving the country’s leading businesspeople six weeks to fully comply with the country’s tax laws. On Wednesday, he had met with around one hundred business leaders to discuss economic policies for his new government.

 

According to the government’s press office, the government and business leaders spoke about a “wide range of issues related to the current economic situation and development prospects.” Abrahamian was quoted as saying that he is open to their “frank evaluations and proposals” about how to improve the investment climate in the country.

“We have agreed that the government will ensure a level playing field for everyone. In return, businesses must come out of the shadows regarding taxes,” the Prime Minister said. “This is our condition. We have set July 1 as the deadline.”

The Prime Minister said his Finance Minister, Gagik Khachatrian had already received orders to carry out the monitoring of businesses’ compliance with tax payments. “I hope they [businesses] will follow the rules; otherwise we will use our leverages to solve the tasks we have set,” Abrahamian said.

The Prime Minister gave no details about the “leverages” in question, or what legal measures will be taken with businesses that are suspected of tax fraud. The government also did not raise its projected tax revenue, and is currently on track to meeting its projection for 2014.

According to a report by Armenia’s Human Rights Defender, some 40 percent of the economy engages in tax evasion. Analysts believe that the problem is especially prevalent among the country’s most wealthy business people.

Government connections have traditionally been essential for business in Armenia, and those entrepreneurs with government ties have used their leverage to maximise profits and outmuscle competitors.

One of the main priorities of the previous prime minister’s government was to improve tax administration. President Serzh Sarkisian in a speech in 2011 also proclaimed that “business must be separate from government.” Yet businesspeople still comprise a significant part of Armenia’s government, with Hovik Abrahamian himself having expanded his business enterprises while holding office in important government positions over the last two decades.