David Ananyan, the Head of the State Revenue Committee had birthday on 10 October and Iravaban.net met him just on that day.

He is in the state system since 2016. He was Deputy Finance Minister in Karen Karapetyan’s Government. This year on 18 May he was appointed the Head of CRS. Since 2004 up to now he delivers lectures at various universities of Armenia.

Iravaban.net  interviewed Davit Ananyan within the scope of the series of “Interview with a member of the Executive Body”. We spoke about his position, activities, the system issues and legislative changes.

– You were in the private sector before taking office. Why did you agree to go to state work?

– Nothing has changed in terms of the sector, because I have been involved in my professional work for the last 26 years: I am a Tax Specialist. I have provided accounting and tax services. In October 2016, when I received a suggestion and came to the public service, I had some plans in the field that had been shaped for decades and after being employed at the Ministry I could already serving to my profession.

There was some awakening at the time when the Karen Karapetyan’s government was in the formation process. I came with many people who had the intention to change something.

The main reason for passing to public service was my commitment to my profession. It was possible to realize the things that had accumulated over the years and I had the opportunity to implement it.

– How did Prime Minister Nikol Pashinyan elect you as the Head of the State Revenue Committee?

– We previously knew each other. We also had some contacts in the National Assembly. When Nikol Pashinyan, was an MP, he actively participated in the discussion of the draft laws, there were contacts and we had formed partner relations. Everyone and the Prime Minister as well, were aware that I was not involved in politics. I have never been a member of any political party or political power. My being apolitical and professional, as well as our earlier personal acquaintance, was the reason that the Prime Minister proposed me the position, which I received with great pleasure.

– Did you come to public service for the same qualities in the previous government?

– Vardan Aramyan, whom I had known for a long time, offered me a government post in 2016. And yes, Vardan Aramyan invited me exclusively for my professional skills. In those days my being apolitical did not hinder me to get a position.

Everybody knew, including in the Republican Party of Armenia that I am not a member of any party and I am not going to join any. It did not hinder my work then, and it does not hinder now either, because it is much easier to be impartial and professional.

– Do you think that after the extraordinary parliamentary elections you will continue to hold office?

– I can definitely say that I shall stay in the sector. It does not matter whether I shall have a government post or not. I will stay in the tax sector and provide tax and accounting advice.

– A number of scandalous appointments have been made recently in the State Revenue Committee. Many accuse you of being the “man of the former government”. What can you say about this?

– If we for example shall consider that we do not tolerate any friendly relations with the former authorities, we may have a sharp deficit of professionalism. We are guided by a person’s professionalism, without being interested about the extent of the person’s relationships or what kind of relationships the person has. There are some restrictions in the law, we examine the scope of those limitations and if there are no legal restrictions on the appointment of a person, then the person is appointed. We are guided solely by the fact of professionalism of a person.

– Recently, there was information that Tigran Martirosyan, singer Sirusho’s and Levon Kocharyan’s godchild, is the head of Tax Service of Arabkir Community of Yerevan City. Karen Sargsyan, Head Mashtots Community Tax Service is the brother of Artavazd Sargsyan, representative of  RPA Party, Head of Ajapnyak Community, who in his turn is Vahram Baghdasaryan’s son-in-law. Hrayr Karapetyan, the Head of Erebuni Community Tax Service is former Prime Minister Karen Karapetyan’s protégée.

– These appointments are not new. They are people who worked and are working in the system; we made reshuffling, and not invited new people from the outside. I believe, that the person who made this publication in the press, did not intend to provide accurate and transparent information to the public but rather pursued other goals.

– You have mentioned that an agreement was reached with Nikol Pashinyan that if the SRC fulfills its tasks in full, then staff appointments were correct,

– As for appointments, we had different opinions with the Prime Minister. As for me, I have more conservative character, and taking into account the peculiarity of the system, I am relying on experienced professionals. I have said the following: It does not matter what the appointments are, the important thing is what we objectives we designate, and if the objectives we have set for us are not met, we will resign together with our cadres.

– Corruption Issues: Are corruption schemes revealed in this area or not? What steps are taken in this direction?

– The phrase “Corruption Scheme” is mainly used when there is a systemic corruption. We have stated that after the recent events we have managed to completely eliminate bribery and corruption in the State Revenue Committee. However, we do not exclude that there may be separate episodes of corruption, for which we conduct daily monitoring in order to exclude them. If such cases are disclosed we initiate corresponding proceedings.

We have recently sent materials on several cases to the Special Investigative Service. We have revealed situations in which our specialist or employee have been involved.

Tonight, we have identified some issues related to our employees in the customs body. We are conducting investigation of the matter and possibly these employees will be dismissed.

– Can you briefly explain the matter?

– It was disclosed by our employees. That is, the relevant employees have identified the relationship of another employee with one of the import cases, which was not a transparent transaction.

– The former Government believed that there was a problem of improving the knowledge and skills of tax and customs officers in the field of anti-corruption and integrity. What steps had been taken in this direction?

– Currently this is the same as it was in the past, because the considerations of the former powers were the absolute truth. There is always room for improvement and struggle. We have improvements, but let’s just say we are far from being perfect.

On the day when we consider that we are satisfied, in essence, it will be time to retire.

– Do you think this day will come?

– The day of my retirement, yes, it will come.

– It is indicated in the CRS Anti-Corruption Program that the lack of person’s awareness is the main prerequisite for the emerging of corruption risks, which inevitably makes possible application of various abuses and discretionary powers.

– I agree, but this is not a dominating problem. Unfortunately, we have to state that tax legislation is quite complex, in many cases there are legal norms that can be ambiguous and those ambiguities can become a basis for discretionary or subjective use. There is such a threat and risk. In order to exclude that risk, we have to change the Tax Code, making it more understandable and affordable.

In this regard, currently, we have done a lot of work; and now we have to go to the National Assembly. We are preparing the package, but from the point of view of simplification the main work is expected to be carried out next year. Now, we are just making changes to the law so that the tax burden of the economy will decrease and it will be able to develop, but the simplification of the legislation will be carried out next year. And yes, in case of resolving these issues, these risks will disappear as well.

– Shadow circulation. What is being done to bring the shadow to the “white” field? (From legal amendments to operative actions, if they are done)

– There is no need to change the legislation to fight against the shadow. It is another matter how we should disclose the shadow.

Everyone speaks of the shadows, but no one knows the extent of shadow in different areas and in addition effective tools should be applied to reveal it. In order to make a discussion about effective tools, we need to evaluate the presence of the shadow at the sectoral level. No evaluations of shadow in taxable sectors have been carried out. Currently we are doing that. There are classifiers for 20 types of activities of national accounts. We want to have an assessment of each sector’s shadow at the level of those 20 types of activities

The legislation puts different tax burden in different spheres. When we have a macro-indicator of shadow in different sectors, we shall need to go down to the micro level from that point. If we have a field shadow estimate, it means that we have a list of players in the area, and this is the point from where we come from the macro level to micro-level and at the level of individual taxpayers, we determine their behavior, and decide whether there are shadow elements in their conduct.

– Mr. Hakob Avagyan, Deputy Minister of Economic Development and Investments said in a conversation with us that a large number of businessmen have legally registered their “black” list workers after the Velvet Revolution and brought them to the “white field”.

– The number of applications for registered employees has increased by 26-28 thousand by the end of September. But I would not say that it is the result of the economic policy pursued by the state or favorable changes in the tax code. It is merely an inertial result of the awakening situation.

If, after some time, we do not present a benchmark of economic development to the public in the political sense, do not make any changes to the Tax Code that will contribute to the development of the economy, we will have a recession.

People today want to get out of the shadows, but legislation and uncertainty are still holding them back, because an awakening has occurred, but after x time if there are no such changes, the public will not see the good things we want to do, this 26-28 thousand will decrease rather than increase

We have reached these results by the inertial indices, but as a government we have not taken any active steps.

In these cases, the word “euphoria” is often used. In your opinion, when will the euphoria pass and will pass?

– The word “euphoria” is often used in such cases. When do you think this euphoria will pass and whether it will pass?

 – Euphoria will pass. That was exactly what I was saying.  We have facts workers registration as a result of euphoria, haven’t we? Now, if that euphoria passes and after that, if we as a government do not offer effective mechanisms to the public, we shall not offer effective mechanisms to the public, there will be a sharp decline in number.

The public must see that we have a clear intention not to tax the capital, not to tax profits, and intend to reduce their taxation.  If we reduce the burden of income tax, then 26-28 thousand that have been registered will become justified and after that we should have even more favorable results.

– Conversations on reducing the income tax rate do not cease, many scenarios are offered. Which scenario are you for Mr. Ananyan?

 – I am for stable or 1 rate. At least at this point, in terms of economy or fiscal policy, if we do not want any fluctuations, establishing the common rate of 23% would be right for the present. In addition to this, there is a profit tax + dividend tax, which together makes 25%, and if the tax rate for this is set at 23% as well, it will be a great impetus for the public that that we have a clear intention to lower the capital and income tax burden.

It is possible that those who receive a salary of up to 150 thousand drams will be displeased or complain that their tax burden does not reduce, but in case if we lower the tax burden of those who receive 150 thousand drams from 23% to 20 %, it would be 4500 drams. Of course this is a considerable sum, but that amount cannot be a decisive factor for the income recipient or purchasing power of the family basket.

We have to think about raising the income of 150 thousand drams to the recipient rather than to pay

We have to think of increasing the income of those who earn 150 thousand drams rather than do not tax at all.

We need to implement such a flexible policy so that the envelope salaries will be excluded and the right earnings are declared.

Interview by Yevgenya Hambardzumyan
Photos by Zakar Iskandaryan

Details in the video.