By Hayk Ghazaryan
A proposal to tax religious goods and some church-owned property has opened a new front in the deepening dispute between Armenia’s government and the leadership of the Armenian Apostolic Church.
Finance Minister Vahe Hovhannisyan says removing the exemptions would improve financial transparency, rather than increase government revenue. The money collected could then finance church programs, potentially exceeding the amount paid in taxes.
But the proposal leaves key questions unanswered: who would choose the programs, whether funding would be guaranteed and whether those decisions could be influenced by the church’s criticism of the government.
The debate comes as Prime Minister Nikol Pashinyan’s administration challenges the leadership and governance of the church, a central institution in Armenian religious and national life. A report commissioned by Pashinyan recommends replacing its leader, Catholicos Karekin II, and changing its governing rules. Parliament has also established a committee to investigate what the governing party describes as a crisis within the church.
Church representatives and opposition lawmakers view the tax proposal as another instrument of political pressure. Government representatives reject that characterization.
No bill has yet been introduced in parliament.
Tax first, funding later
In an interview with CivilNet, Hovhannisyan proposed ending tax exemptions for the production and sale of religious goods and requiring cash registers to record transactions.
He also called for distinguishing places of worship from other church-owned properties, including apartments, land and buildings used to house clergy or conduct other activities.
“That is where clarification is needed — to distinguish churches from civilian properties, so to speak, and understand why these properties should have exemptions,” he said.
Hovhannisyan said the tax revenue could be returned to the church through funding for its programs. If necessary, that funding could exceed the taxes collected.
Arman Yeghoyan, a lawmaker from Pashinyan’s Civil Contract party who chairs the parliamentary inquiry, told CivilNet he did not yet know the technical details. He compared the idea to Armenia’s system of refunding income tax to cover mortgage interest payments.
As a possible recipient of funding, he cited the operating expenses of the Gevorgian Theological Seminary, which trains clergy.
“Buying a megaphone for Archbishop Bagrat Galstanyan, for example, would naturally be unlikely to receive state budget funding,” he said, referring to a cleric who led anti-government protests.
Asked whether funding could stop if clergy continued criticizing the government, Yeghoyan questioned the boundaries between religious and political activity.
“When you say church and state are separate, how are they separate? Is only the state separate from the church, while the church is not separate from the state?” he said. “Can the church, the catholicos or an archbishop start a political march whenever they want?”
His answers did not establish whether the church would have a legal entitlement to recover the money or would need approval for individual programs. Criteria for approving or rejecting funding have not been presented.
From candles to property
The church’s existing exemptions are set out in a 2007 law governing relations between the state and the Armenian Apostolic Church and the Tax Code.
The 2007 law exempts donations and offerings received by the church, as well as the production and sale of religious objects and supplies.
The Tax Code separately provides value-added tax exemptions for religious ceremonies and certain sales of religious goods involving religious organizations. Those provisions apply beyond the Armenian Apostolic Church.
Property tax exemptions also extend beyond historic churches. They cover certain other churches belonging to the Mother See of Holy Etchmiadzin, the church’s headquarters, as well as designated religious, cultural and educational buildings, premises used to produce and sell religious goods, and workshops serving the church.
The government determines the list of qualifying properties. The proposal’s scope will therefore depend on which exemptions are removed and which properties become taxable.
Bishop Ararat Galtakjian, co-chair of the Mother See’s audit committee, said sales of candles and other religious goods cover only 10–15 percent of its expenses. He does not consider the activity a business.
He also pointed to a dispute over imports of paraffin, the raw material used to make candles. Before 2018, he said, those imports were recognized as part of a charitable program, but that treatment subsequently changed.
The church argues that the exemption for producing religious goods should also cover the raw materials needed to make them.
The law, however, treats charitable imports separately. Such imports may qualify for a VAT exemption, with an authorized government body determining a program’s charitable status and the scope of relief where legislation does not specify them.
The exemptions for selling religious goods and importing raw materials under a charitable program therefore rest on different legal grounds.
Transparency or political pressure?
The tax debate is unfolding alongside broader government efforts to challenge the church’s leadership.
The report prepared by the Public Relations and Information Center within the prime minister’s office alleges financial opacity and recommends Karekin II’s removal, new governing rules and the election of a new catholicos. Those are the report authors’ allegations and recommendations.
Participants in an October 9 meeting at the Mother See condemned the parliamentary inquiry as an attempt to interfere with church autonomy. They urged the parliamentary majority to remain within its constitutional powers.
Artur Khachatryan, a lawmaker from the opposition Armenia Alliance, linked the tax proposal to the campaign against the church and its leader. He also cited the withdrawal of public funding from the church-affiliated Shoghakat television channel.
“They can now say it is a tax and everyone should pay, but we understand the real reason, don’t we?” Khachatryan told CivilNet. “This is a campaign against the church, a campaign unleashed personally against the catholicos.”
Yeghoyan rejected the pressure allegation, describing financial transparency as a state responsibility.
“It could be considered pressure only if there is undeclared profit that they do not want to disclose, and this system would force them to disclose it,” he said.
Galtakjian, meanwhile, described the tax dispute as part of years of pressure on the church, with the government’s demands expanding from taxation to property, transparency and control over funding.
Hovhannisyan has given no timetable for the changes and says public discussion is needed. Yeghoyan said consultations could take place but suggested they might be unnecessary because elected lawmakers were already conducting the debate.
The Tax Code, however, lists prior consultation with professional and civil society organizations, business representatives and relevant state bodies among its principles for amendments.
Until a bill is presented, both the extent of taxation and the funding arrangements remain undefined — including how much would be collected, who would decide where the money goes and whether the church’s political positions could affect those decisions.
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