Tax evasion is, of course, a serious problem and this is particularly true for many countries in Eastern Europe. Armenia, however, has come up with a fairly unique idea that they hope will help address the tax evasion which is becoming rampant in their country.
According to a report on Reuters, the Armenian government has come up with a form of incentive which they hope will be successful in putting a stop to the prevalence of tax evasion which is being witnessed in the small country that used to form part of the Soviet Republic. Tax evasion is so high in the country predominantly because very few shops or traders provide receipts with the purchases that people make and this obviously facilitates tax evasion by these shop owners who are able to eschew the taxes that they owe. In response to this problem, the Armenian government has decided to set up a form of national lottery whereby those making purchases from shops that do offer receipts stand a chance of winning a certain amount of cash if their receipt bares the number that is drawn from a lottery each month. This is clearly a fairly unique way of trying to deal with tax evasion but is one that the Armenian government hopes succeeds.
Tax Evasion – Early Stages
The lottery scheme set up in Armenia to help battle tax evasion is only in its formative stages having only being initiated on the 1st of January this year. It is hoped, however, that the scheme will act as encouragement for shop owners in the country to purchase receipt machines and, in turn, reduce the amount of tax evasion which is engaged in. Armenia is only a small country, with a population of just 3.2 million, but, according to the report on Reuters, it is suggested that tax evasion accounts for around 30-40% of the economy in the country, which just goes to show how extensive tax evasion is in many areas of the former Soviet Union.
Tax Evasion – Uphill Struggle
According to the report on Reuters, the Armenian government hope that the introduction of more cash registers and the lottery scheme to the country will help reduce tax evasion and increase tax receipts by as much as $17m annually. It may be some time before the tax evasion initiative has the desire results, however, as it has received a tepid response from many in the country. Speaking to Reuters, Vahan Kerobyan, Chief Executive of Star Supermarkets, stated, “The market sellers don’t want to install cash registers because they want to avoid paying taxes.”
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