Samvel Martirosyan on Banking Secrecy

There is no talk of the cancellation of banking secrecy, but a mechanism has been created that easily bypasses that secrecy. This was stated by media expert Samvel Martirosyan on his Facebook page.

“Let me write a couple of things about income declaration and banking secrecy for clarity. In fact, there is literally no talk of the cancellation of banking secrecy. However, a mechanism has been created that easily circumvents that secrecy. Below, I will present the amendment to the Tax Code adopted last March, and society has been asleep during this moment (I did not understand one thing; this amendment is not incorporated into the published tax code in Arlis). In fact, it has now become a three-phase process.

The tax authority receives the balances of a person’s bank accounts at the beginning and end of the year from the banks. Then, if questions arise at the tax authority, the person is notified and must provide the bank statement certified by the commercial bank within three days to the tax authority. If they fail to do so, they are forced to provide the statement by court order. This means that there is already a cumbersome banking secrecy. De facto, the tax authority can notify everyone and receive the statements from everyone within three days—rapidly and voluntarily.

Now, specifically about this part of the law:

Article 1. Amend the first part of Article 4 of the Tax Code of the Republic of Armenia dated October 4, 2016 (hereinafter referred to as the Code) by adding the following content with point 78:

“78) Summary information on the bank account, including the taxpayer's bank account, currency, balance as of January 1 and December 31 of the tax year, as well as information on the total amount deposited into the bank account and the total amount withdrawn during the tax year.”

Article 350.1. Acquisition of bank account statements and summary information

1. In accordance with the procedure established by Article 332 of the Code, for the purpose of risk assessment within the framework of tax control, the tax authority obtains summary information about each taxpayer's bank accounts through an electronic system from commercial banks in the Republic of Armenia via the Central Bank of Armenia until the specified deadline for the submission of the profit tax report, and for individuals who are not individual entrepreneurs or notaries, until the deadline for submitting the annual income tax return (declaration) stipulated by the Code. The technical description of the electronic system envisaged in this part, the procedure for transferring information, and the standard format of the transmitted data are determined by the Central Bank of Armenia in coordination with the tax authority.

2. In order to obtain the bank account statement (for the tax control period) of the taxpayer within the framework of tax control established in Section 17 of the Code, the tax authority makes an inquiry through the electronic management system to the taxpayer’s personal page, and the taxpayer is obliged to provide the bank statement certified by the commercial bank within three working days after receiving the inquiry, and for individuals who are not individual entrepreneurs or notaries, within five working days. The inquiry referred to in this part is considered received the next day after it is placed on the taxpayer’s personal page in the electronic management system.

3. If the taxpayer does not provide the bank statement within the specified deadlines after receiving the inquiry from the tax authority as stipulated in the second part of this article, the tax authority obtains the bank statement based on a court decision according to the procedure established by the Administrative Procedural Code of the Republic of Armenia.”