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


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 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.

In this Feature Service article, Gagik Poghossian, one of the founders and the Deputy Chairman of the AFIC’s Board, discusses his organization’s successful approach. Following a period of extensive analysis of the existing tax code, AFIC produced concrete reform recommendations, outlined its advocacy plan, and conducted an awareness campaign. On August 19, 2008, Armenia’s National Assembly adopted a package of legislative reforms that included those recommended by AFIC. 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.

The new system reinforces the rule of law in Armenia and helps develop fair and relevant policies for the private sector. Mr. Poghossian comments, “AFIC’s tax reform initiative showed the importance of getting private sector actors organized to identify their interests and to base the arguments for the policies they advocate on sound economic analysis.”

Article at a Glance

  • Corruption generated by Armenia’s tax system undermines public confidence in the rule of law and democracy.
  • The private sector is often an unwilling participant in corrupt transactions.
  • Government initiatives to combat corruption have shown little measurable impact.
  • Armenia’s private sector must solve the collective action problem and stand up to corruption.