Small Business Owners Can’t Seem to Catch a Break

Landlord Vagharsh Abrahamyan giving orders to dismantle and destroy stalls in the Gold Market, Yerevan.

While Armenia's government has continuously stressed the importance of and considers small and medium-sized enterprises to be the backbone of the country's economy, many small business owners continue to struggle.

Proposed changes to the tax legislation that will reduce the turnover sales tax from 3.5 to 1 percent led to a protest in front of the government building in Yerevan by hundreds of small and medium size business owners on September 25.

Although the proposed amendment seems like a positive change to the current situation, the tax reduction comes with certain conditions. The new law, that is to be officially implemented on October 1, calls for in-depth documentation of all commodity from business owners. Failure to provide proper documentation to authorities results with a slap on the wrist the first time, a 20,000 dram or about US $50 fine the second time, and a fine in the amount of five percent of the turnover tax the third time.

This mandatory inventory requires much time and resources-- such as hiring a bookkeeper to produce proper documentation-- that will increase costs, moreover, some companies where these small business owners make purchases from do not always provide and often refuse to issue receipts or any other form of proper documentation.

Prime Minister Hovik Abrahamyan came out to talk with the protesters and told them that they “Should help in bringing the large ones into the taxation field. This is our goal. We are not your enemy, we will help you.” One of the protesters said,“He wants to catch big fish? Doesn’t he know who they are?” She commented that often times these large business owners are very well-connected and some are even members of parliament. These small business owners believe that this new taxation law is an attempt to trample their businesses.

Meanwhile, at the Gold Market, business owner Vagharsh Abrahamyan and his aides were caught on camera by “Zoghovurd” daily removing and destroying stalls while his tenants were away at the demonstration. Abrahamyan justified his actions by claiming that it was punishment for those tenants who ignored his orders and participated in the demonstrations. The unrepentant Abrahamyan told the paper that he believes he did the right thing and will continue doing it as need be.

In a chilling discovery, the police are not prepared to charge Abrahamyan for defacing property due to the absence of formal complaints from the tenants. In response to CivilNet’s query as to whether formal charges will be laid, the press office of Yerevan Police said that they have not received any formal complaint, therefore they will not be pursuing the matter.

However CivilNet spoke with the office of the Human Rights Defender of Armenia, who said, “The video provides enough evidence to illustrate criminal activity and according to our legislation, law-enforcement bodies -- the police, the prosecutors, the Investigative Committee -- can open a criminal case on this matter.”

The rallying business owners staged another protest in front of the country’s National Assembly on September 29, to appeal to lawmakers to reconsider the new law. Members of parliament representing the Armenian National Congress and the Prosperous Armenia party met with the protesters and assured them that they are planning on calling a special session of parliament to propose an alternative solution. Determined, the small business owners were at the National Assembly once again on September 30. Aram Manukyan of the Armenian National Congress told CivilNet that they have submitted the issue to be placed on the parliament's agenda. CivilNet later learned that the issue has been placed on the parliament's agenda today, but in order for the session to begin, a quorum is necessary.