Reform of the Tax System: Armenia’s New Anti-corruption Tool

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Introduction

An open and transparent dialogue between the broad-based business community and the state is a key feature of a functional democracy. Grassroots advocacy efforts introduce politicians and government officials to new ideas and provide a roadmap for policy improvements supported by the voice of the people. This is the context that served as a foundation for the Association for Foreign Investment and Cooperation’s (AFIC) efforts to create a platform for public-private policy dialogue on tax reform in Armenia.

Following a period of extensive analysis of the existing tax code, AFIC produced reform recommendations, outlined its advocacy plan, and conducted an awareness campaign directed toward political parties. AFIC reviewed and proposed changes to the package of tax-related laws and suggested concrete implementation mechanisms. The participation of the business community and other stakeholders in every step of this process created an excellent foundation for a broad-based, informed policy debate.

By establishing a three-way conversation among NGOs, private enterprise, and government officials, AFIC has had an extraordinary impact on the development of Armenia’s tax system reform as announced by the government. The draft reform package was presented in an extraordinary summer session in 2008 – held during the National Assembly’s traditional recess period – and many of AFIC’s recommendations were adopted. The new system reinforces the rule of law in Armenia and helps develop fair and relevant policies for the private sector.

Gagik Poghossian is one of the founders and the Deputy Chairman of the Board of Association for Foreign Investment and Cooperation (AFIC). He graduated from Yerevan Economic Institute with a degree in Economics and a Certificate in Economic Law, and has a master’s degree in Philosophy and International Economics from Yerevan State University. Poghossian was previously the CEO of the Armenian Business Forum, and was the Executive Director of the Armenian Business Corporation, a capital stock investment. He has also served as a consultant for USAID, UNDP, UNIDO, the World Bank, and other international organizations in Armenia.

The Association for Foreign Investment and Cooperation (AFIC) is an Armenian non-profit, non-governmental business association devoted to the promotion of foreign investment and the development of international economic cooperation. AFIC was established in 1998 and supports the implementation of policies, which are oriented at democratic reform in economy, development of private entrepreneurship and strengthening business associations. For more information on AFIC’s tax reform initiative, visit

http://www.afic.am/TaxReform/TaxReformEng.html.

The views expressed by the author are his own and do not necessarily represent the views of the Center for International Private Enterprise. The Center for International Private Enterprise grants permission to reprint, translate, and/or publish original articles from its Economic Reform Feature Service provided that (1) proper attribution is given to the original author and to CIPE and (2) CIPE is notified where the article is placed and a copy is provided to CIPE’s Washington office.

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