The tax authority will give businesses one week to pay their taxes. If taxes are not paid within that week, the tax authority will impose a lien on business accounts, as well as on movable and immovable property.
After that, if taxes are not settled within 30 days, the tax authority will turn to the enforcement service to demand the collection of obligations.
Legislative changes have been made to the tax code, establishing new rules for tax payment, which will require businesses to pay taxes within 7 days starting from July 1.
“Under the new regulations, a reminder will be sent to the taxpayer on the day the tax obligation arises via the electronic reporting system. If the reminder is sent and the obligation is not fulfilled within 7 calendar days, and if the presented objections are not accepted or no objections are presented, the tax authority will make a decision on the same day to collect the obligation, as well as to impose a lien on the taxpayer's bank account funds and on movable and immovable property subject to registration or accounting in accordance with the law.
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If a lien is imposed and the tax obligation is not fulfilled within 30 days, the relevant decisions will be submitted to the Enforcement Service for forced execution,” warns the State Revenue Committee to businesses.
What this means for businesses is not hard to understand. All those who, for various reasons, cannot fulfill their tax obligations on time will be under direct attack from the tax authority and at risk of closure.
It is not enough just to block accounts; there will also be a lien placed on movable and immovable property that has production significance.
This means that business activities will be paralyzed, forcing them to suspend operations until tax obligations are fulfilled.
Timely fulfillment of tax obligations is a duty of every business. But this does not happen in a vacuum; businesses may find themselves unable to pay taxes on time for various reasons. Therefore, a mechanism of fines and penalties is usually applied. Fines and penalties are calculated for unpaid taxes.
This approach is important because it gives businesses time and opportunity to correct the situation. It may happen that a business's operations decline for 1, 2, or even 3 months, and it may not have the ability to pay taxes. After that, financial problems may be resolved, and it may be able to meet not only current but also previously incurred obligations.
The previously operating system gave businesses a chance to work and recover. This is essentially excluded by the new regulations.
With the new regulations, businesses do not get time to recover. The tax authority immediately comes in and places a lien on business accounts, depriving them of the opportunity to use movable and immovable property. It simply locks the doors of businesses. They are given 30 days to pay taxes; otherwise, they face the threat of confiscation of all assets.
After 30 days, enforcement officers come in and seize the movable and immovable property under lien. After the lien, of course, it will be put up for sale to cover the business's tax debts.
This is the entire process that will occur under these new tax regulations that will be enforced starting July 1 for businesses unable to pay taxes on time. They will no longer wait for businesses to find the opportunity to do so.
It is difficult to say which businesses are currently unable to fulfill their tax obligations on time. However, there are certainly many. And all of them, after these new regulations come into force, will be at risk of closure.
Why they decided to impose such strict administrative pressure on businesses right now is not officially explained. It can be assumed that the number of businesses unable to pay taxes on time and accumulating overdue debts has increased.
The problem of overdue debts has always existed in Armenia, but previously there had never been attempts to introduce such regulations. It is possible that this phenomenon has become so widespread that they decided to implement such strict measures, disregarding the serious risks it poses to the continuity of business operations. This will lead to the bankruptcy and closure of many businesses, the consequences of which will later be reflected in both the economy and tax revenues.
Closing businesses benefits no one, but this will lead to that. Many businesses unable to pay taxes on time due to financial difficulties will be forced to find ways to pay or will be compelled to go bankrupt.
If the issue is about ensuring current tax revenues for the budget, then judging by the official statements, there should not have been a need for such strict measures. They even talk about exceeding tax revenues. However, on the other hand, before the elections, they took on so many new expenditure obligations that are not covered by the planned tax revenues of the state budget. And now, essentially, they are trying to solve these problems through such strict measures.
For the same purpose, immediately after the elections, they increased the tax burden on excise goods, and starting January 1, they will implement mandatory labeling of goods, planning to deprive microbusinesses and turnover tax entities of the opportunity to operate in these fields for 5 years.
It is expected that similar “innocuous” tax regulations will continue in various sectors in the near future, which will burden businesses and consumers. They are even preparing to charge a state fee for importing mobile phones for personal use.
