2011年-世界发展银行全球_The_Costs_of_Tax_Compliance_in_Armenia_152页_3mb

Summary of "The Costs of Tax Compliance in Armenia" Report

Core Content

This report, published in 2011 by the International Finance Corporation (IFC) in partnership with the World Bank Group, presents the findings of a tax compliance cost survey conducted in 2009 among 750 companies and 250 individual entrepreneurs in Armenia. The goal of the survey was to assess the time and financial burden of tax compliance on businesses, with a particular focus on the most costly and problematic aspects of the Armenian tax system.

Main Findings

Tax Compliance Burden

• Overall Burden: The total tax compliance costs for all Armenian businesses in 2009 amounted to AMD 10.24 billion, or approximately 0.3% of the country's GDP.
• Companies vs. Individual Entrepreneurs: Companies spent about six times more on tax compliance than individual entrepreneurs.
• Small Businesses: Small businesses and individual entrepreneurs bear a disproportionately higher burden relative to their income. In 2009, the smallest companies spent 17.5% of their income on tax compliance, while the smallest individual entrepreneurs spent 4.6%.

Time and Cost Breakdown

• Tax Accounting: This was the most time-consuming and costly procedure, representing 73% of total costs for companies and 63% for individual entrepreneurs.
  • Maintaining Books: Keeping the book of registration of revenues and book of shipment of inventory holdings is the most burdensome part of tax accounting.
    • Companies spent on average 255.8 hours maintaining these books.
    • Individual entrepreneurs spent 102.7 hours on average.
  • Learning and Analyzing Tax Legislation: Companies spent 81.8 hours annually on this task, which is about 40% of the total time spent on tax accounting and reporting.
• Submission of Tax Reports and Payments:
  • Companies spent an average of 50 hours on this.
  • Individual entrepreneurs spent 36 hours on average.
• Tax Inspections:
  • Represented 3% of total costs for both companies and individual entrepreneurs.
  • Unofficial Visits and Time Spent on Appeals are major concerns, with over 44% of companies and 34% of individual entrepreneurs being inspected in 2009.
  • About 10% of businesses faced unofficial visits from tax officials.

International Comparison

• New Zealand: Small and mid-sized businesses spent 76.7 hours annually on tax compliance, significantly less than Armenian businesses.
• Armenia's Tax System: The complexity and ambiguity of Armenian tax legislation, along with the need for manual record-keeping and frequent filings, result in regressive compliance costs.
• Other Countries:
  • EU: SMEs spent -2.6% of sales on tax compliance, while large businesses spent -0.2%.
  • Ukraine: Tax compliance costs were as high as 8.2% for small businesses.
  • Uzbekistan: The costs ranged from 15.6% for small businesses to 0.1% for large ones.
  • South Africa: Costs varied from 4.8% for small businesses to 0.08% for larger ones.
  • Canada: Costs ranged from 0.10% for smaller businesses to 0.06% for larger ones.
  • United Kingdom: Tax compliance costs for SMEs were 0.05% for VAT and 0.04% for corporation tax.
  • The Netherlands: Costs ranged from 0.02% for mid-sized businesses to 0.006% for large ones.

Key Issues Identified

Complexity of Tax Legislation

• Annual Analysis Time: Businesses spent an average of 82 hours annually analyzing tax legislation.
• Frequent Changes: Tax legislation often changes, forcing businesses to constantly update their knowledge and practices.

Inefficient Tax Procedures

• VAT Accounting: Took the most time for companies (80% of tax compliance work) and about 66% for individual entrepreneurs.
• VAT Refund Process: Long and complicated, with many businesses struggling to obtain refunds.
• Manual Accounting: Many companies still use manual methods, increasing time and cost.
• Tax Reporting Forms: The profit tax report form required the most time to fill out for companies, while social security payment forms were the most time-consuming for individual entrepreneurs.

Reporting and Payment System

• In-Person Filing: The physical process of filing and paying taxes in person is the most costly aspect of the reporting and payment system.
• Frequent Visits: Companies and individual entrepreneurs had to visit tax offices and local authorities multiple times, often for reasons unrelated to reporting.
• Additional Information Requests: About 19% of companies were requested to provide additional information.

Compliance Costs

• Other Costs: Included purchasing blank tax reports, tax publications, accounting software, and participating in training events.
• Cost for Companies: AMD 66,300 on average.
• Cost for Individual Entrepreneurs: AMD 3,200 on average.

Recommendations

• Simplify Tax Accounting: Reduce the need for maintaining multiple special tax books.
• Improve Tax Legislation Clarity: Provide more straightforward and stable tax rules.
• Enhance E-Filing System: Make it fully functional to reduce the time and effort of reporting and payment.
• Reduce Unofficial Visits: Ensure that tax officials are properly informed and that such visits are justified and transparent.
• Promote Outsourcing: Encourage businesses to outsource tax compliance tasks to reduce costs.
• Streamline Inspection Process: Implement a more effective and fair risk-based audit system.
• Improve Appeal Mechanisms: Ensure that the appeal system is accessible and commonly used by businesses.

Conclusion

The report highlights that tax compliance in Armenia is a significant burden on businesses, particularly on small and medium enterprises (SMEs) and individual entrepreneurs. The inefficiencies in the tax system, such as the complexity of legislation, the need for manual accounting, and the time-consuming nature of reporting and inspections, contribute to high compliance costs. These findings provide a foundation for reforming Armenia's tax administration system to reduce the compliance burden and improve the business environment.