Armenian Small Business Owners Protest Tax Hike: ‘Government Proposal Unsatisfactory’
YEREVAN—Small business owners in Armenia are staging ongoing protests against the government’s decision to double the circulation tax, a move they say threatens their livelihoods and could exacerbate economic hardship. On March 3, entrepreneurs gathered in front of the government building in Yerevan for renewed demonstrations, expressing their dissatisfaction with the proposed tax increase from 5% to 10% and the government’s response to their concerns. Despite a temporary deferral announced by the government, protesters argue that the offered solution is inadequate and fails to address the core issues.
Tax Hike Sparks Renewed Protests
For the second time in recent weeks, circulation tax payers have mobilized in Yerevan, voicing strong opposition to the tax increase that took effect on January 1. The protesters, primarily small and medium-sized business owners, argue that doubling the tax burden will cripple their businesses, particularly in the current economic climate where consumer demand is already weak and costs are rising. The demonstrations on March 3 underscore the business community’s continued frustration and their determination to pressure the government to reconsider its tax policy.
Government’s Deferral Fails to Appease Business Owners
Last week, Deputy Speaker of the National Assembly Vrezh Khitaryan met with representatives of the protesting business owners. Following this meeting, the government announced a six-month deferral of the tax hike, seemingly as a conciliatory gesture. However, this measure has failed to quell the discontent among entrepreneurs.
According to one protesting business owner interviewed on March 3, the government’s deferral is misleading and provides no real relief. “The government’s decision is not satisfactory at all, because it applies only to those people who inventoried their goods as of January 1, and naturally, there are no such people,” the entrepreneur stated. This highlights a key point of contention: the deferral conditions are perceived as unrealistic and inapplicable to most small businesses, rendering the government’s concession ineffective.
‘They Want to Bankrupt Us All’: Business Owners Allege Deception
Protesters accuse the government of attempting to mislead the public and undermine their movement. “They say that for these two quarters we will pay 10%, and then they will return it, but that is also a complete lie, a deception,” the business owner claimed. This sentiment reflects a deep distrust of the government’s intentions and a belief that the deferral announcement was a tactic to diffuse the protests rather than a genuine attempt to find a solution.
The entrepreneur further argued that the increased tax burden, coupled with the rising costs of accounting and business operations, is unsustainable for small businesses. “With this decision, those who do not work with documents pay 10 percent. In addition, if earlier an accountant worked 1-2 hours for one SME, now, naturally, he has to work three or four hours a day, and accordingly, he has to be paid. This increases costs,” she explained. This concern points to the broader impact of the tax hike on the operational expenses and administrative burden faced by small businesses. Call for Dialogue and Fears of Economic Collapse
Business owners are demanding a phased approach to tax reforms and a genuine dialogue with the government to address their specific concerns. “We proposed that it be discussed step by step, gold trade separately, clothing separately, economic separately, they did not accept our proposal,” the protester noted. They express frustration that their concerns are being misrepresented as unwillingness to pay taxes, when in fact, they seek a more equitable and manageable tax system that supports, rather than stifles, their businesses.
“Enter any fair today, and see, you can count on your fingers how many customers there are. Business is already in a very difficult phase, everything has already become more expensive. Now, along with this, they are also putting pressure on us, maybe they want to initiate court cases, maybe they want to imprison us all or there will be depopulation, I think their goal is intentionally that,” the business owner lamented, expressing fears of widespread business failures and potential emigration due to the increased tax pressure. This statement underscores the desperation and anxiety among small business owners who fear the tax hike will lead to economic collapse for their sector.
Meeting with Economy Minister: No Immediate Resolution
In response to the ongoing protests, Minister of Economy Gevorg Papoyan met with the protesting business owners on March 3. Papoyan stated that the government aims to encourage businesses to operate with proper documentation, which he argued would ultimately reduce their tax burden. He acknowledged the validity of some arguments from both sides and emphasized the problem of larger businesses operating undocumented, setting a negative example for smaller enterprises.
Papoyan appealed to the business owners to clearly articulate their specific problems so that the Ministry could work towards finding solutions. “We can find solutions together, or if you offer better ones. If you don’t offer, give us time, we will go and think, come and say that for this problem we have come up with this solution, if you say it is bad, we will go and think of something new or improve our proposal,” Papoyan suggested, indicating a willingness to engage in further discussions and potentially revise the government’s approach.
Uncertain Future and Calls for Continued Dialogue
While some business owners expressed hope after the meeting that a resolution could be found, others remained skeptical, feeling that their concerns were not fully understood or addressed. Hakob Avagyan, co-founder of the SME Cooperation Association NGO, emphasized the unified demand to suspend the implementation of the increased tax rate, highlighting that the core principle of circulation tax – simplicity and transparency – has been distorted.
Despite the government’s deferral and ongoing dialogue, the fundamental issues remain unresolved. Business owners continue to demand a reversal of the tax hike and a more collaborative approach to tax policy that considers the challenges faced by small and medium-sized enterprises in Armenia. The situation remains fluid, with the potential for further protests and negotiations as both sides seek a viable path forward.
For more insights on the current economic challenges in Armenia, visit Azat TV’s Economy section.