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The government on Thursday voiced support for an opposition proposal to at least restrict the presence of offshore-registered companies in Armenia’s mining industry accused by critics of tax evasion.

Hrant Bagratian, a former prime minister who is now an opposition parliamentarian, has been one of the industry’s most vocal critics. Bagratian claims that the mostly foreign firms mining copper, gold and other non-ferrous metals in the country are grossly underreporting their earnings which he says they are four times higher than sums declared to tax authorities. The offshore status of some of those firms only facilitates the tax evasion, according to him.

Last month, Bagratian drafted a law draft that would ban companies registered in foreign tax havens from any involvement in Armenia’s mining and metallurgical sectors. It would also ban other mining companies from selling their commodities to and buying any raw materials, equipment or services from offshore firms.

Prime Minister Tigran Sarkisian’s cabinet formally called on the National Assembly not to pass the bill, saying that it is flawed and would not address the concerns raised by the outspoken ex-premier. Still, the government voiced support for imposing major curbs on offshore firms.

“While being generally in favor of the idea that the entry of companies registered in offshore zones into the mining sector needs to be restricted, we believe that the draft law is not structured in a way that would enable us to impose those restrictions,” said Finance Minister Vache Gabrielian. He said the government will submit an alternative bill to the parliament soon.

Sarkisian indicated that the government is open to incorporating some of Bagratian’s ideas into the bill. “Mr. Bagratian’s proposals are congruent with the policy that we must implement, and I think Mr. Gabrielian’s approaches create a basis for us to draw up more effective laws together with Mr. Bagratian with the aim of carrying out that proper oversight [of the mining industry.]”

In Gabrielian’s words, the upcoming government bill will include draft amendments to a Mining Code that was enacted almost two years ago. The code was meant to boost tax revenues from the production of base metals and ore concentrates that are Armenia’s single largest export item.

Bagratian, who has been highly critical of the government’s economic policies, said later on Thursday that he has received no official government reply yet.
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