Tweet
SME IMBALANCE: SMALL-MEDIUM ENTERPRISES SHOW LITTLE IMPACT ON STATE BUDGET
By Gayane Lazarian
ArmeniaNow
13.07.12 | 13:48
Out of the more than 100,000 Armenian small and medium enterprises
(SME) only 20 percent have made tangible contribution to the state
budget. The rest are registered companies with no economic activities.
Public Council member Vazgen Safaryan, chairing the Armenian Union of
Domestic Commodity Production, says there are 132,000 "stamp putters",
but only 2,100 matter to the budget. He suggests that super-small
organizations be given more privileges, in order for a middle stratum
to be formed without which, he says, stable society is impossible.
Speaking about the SME development he says acquisition of loans is
a big challenge to them, because of high interest rates and unfair
competition.
"Big businesses have much better chances to get loans, they even
possess banks, while small businesses are in constant search for
loans, as their volumes are small, loan interest rates are high, and
profitability is low. Big businesses work in different directions,
so if one direction fails they can gain profit from another one. And
here is where the state has to subsidize, policy of compensations
should be applied," he says.
Safaryan believes that tax policy in Armenia is strict and fiscal:
taxes are rather high, whereas the VAT should long have gone down from
20 to 18 percent. The state has to take that step, but 65 percent of
the state budget comes from VAT payments.
"Indirect taxes in our country, such as VAT, excise and custom duties
provide 65 percent of the state budget; and in developed countries,
as opposed to us, 80 percent comes from direct - income and profit -
taxes," says Safaryan, adding that it's those indirect taxes that
hinder economic development in Armenia.
Safaryan informed that a group has been created, co-chaired by the
Financial-economic and Budget Commission of the Public Council, which
has 40 SME representatives; the group is responsible for bringing
reforms in the field.
"We have to lobby for legislative reforms, increased privileges
to super-small businesses, SME development all around the country,
great advantages to SME in border regions," he says.
Safaryan believes this kind of privileges might be a good chance for
those manufacturers who have had viable businesses abroad and are
willing to open small or medium businesses in their native villages,
mainly in the field of modern and old Armenian carpet weaving and
textile manufacturing.
From: Emil Lazarian | Ararat NewsPress
By Gayane Lazarian
ArmeniaNow
13.07.12 | 13:48
Out of the more than 100,000 Armenian small and medium enterprises
(SME) only 20 percent have made tangible contribution to the state
budget. The rest are registered companies with no economic activities.
Public Council member Vazgen Safaryan, chairing the Armenian Union of
Domestic Commodity Production, says there are 132,000 "stamp putters",
but only 2,100 matter to the budget. He suggests that super-small
organizations be given more privileges, in order for a middle stratum
to be formed without which, he says, stable society is impossible.
Speaking about the SME development he says acquisition of loans is
a big challenge to them, because of high interest rates and unfair
competition.
"Big businesses have much better chances to get loans, they even
possess banks, while small businesses are in constant search for
loans, as their volumes are small, loan interest rates are high, and
profitability is low. Big businesses work in different directions,
so if one direction fails they can gain profit from another one. And
here is where the state has to subsidize, policy of compensations
should be applied," he says.
Safaryan believes that tax policy in Armenia is strict and fiscal:
taxes are rather high, whereas the VAT should long have gone down from
20 to 18 percent. The state has to take that step, but 65 percent of
the state budget comes from VAT payments.
"Indirect taxes in our country, such as VAT, excise and custom duties
provide 65 percent of the state budget; and in developed countries,
as opposed to us, 80 percent comes from direct - income and profit -
taxes," says Safaryan, adding that it's those indirect taxes that
hinder economic development in Armenia.
Safaryan informed that a group has been created, co-chaired by the
Financial-economic and Budget Commission of the Public Council, which
has 40 SME representatives; the group is responsible for bringing
reforms in the field.
"We have to lobby for legislative reforms, increased privileges
to super-small businesses, SME development all around the country,
great advantages to SME in border regions," he says.
Safaryan believes this kind of privileges might be a good chance for
those manufacturers who have had viable businesses abroad and are
willing to open small or medium businesses in their native villages,
mainly in the field of modern and old Armenian carpet weaving and
textile manufacturing.
From: Emil Lazarian | Ararat NewsPress