Armenian President Robert Kocharian instructed senior officials of the State Tax Service on 29 July to do more to tackle corporate tax evasion.

In a meeting with Armenian tax authorities, Kocharian criticized the current effort as unsatisfactory and argued that "our main enemies are favoritism and clan-style practices." He added that the continued evasion of corporate taxes was due to "government corruption and favoritism," and cited the construction sector in particular, which paid only 13 percent more in taxes despite a record expansion of over 40 percent in the first half of the year. State Tax Service Director Feliks Tsolakian explained that corruption and a pattern of conflicts of interest among his employees are a major problem and added that to date, roughly 200 tax officials have been found to be "directly or indirectly involved in business." Revenue from tax collection and customs duties account for a large portion of overall budget expenditures and are projected to increase by another 25 percent to 394.6 billion drams ($885 million) for 2005. Although the overall level of tax revenue for the first half of 2005 grew by some 24 percent, a study conducted by the presidential Oversight Service confirmed that a significant portion of economic activity in Armenia remains untaxed.