By Atom Markarian
The Armenian tax authorities have published the list of about 2,000 small and large companies, among them many of the country's most lucrative businesses, that claim to have operated at a loss last year. Their aggregate losses total some 90 billion drams ($160 million) -- a suspiciously high figure that has led the ministry for state revenues to launch a wave of inquiries into possible cases of tax fraud.
The ministry has long suspected many corporate taxpayers of grossly underreporting their revenues in order to evade profit taxes. It was instrumental in the passage late last year of legislation toughening punishment for companies that post false losses. Those found to have engaged in the practice are to face heavy fines worth 20 percent of their reported losses.
Tax officials have been inspecting financial records of hundreds of private firms suspected of fraud. Deputy Minister for State Revenues Armen Alaverdian said on Wednesday that many of them have revised downwards their losses as a result.
"If it turns out that the losses are inflated, then, in accordance with the new law on profit tax, we will have to impose a 20 percent fine," Alaverdian said. He did not specify the number or names of the companies that have already been subjected to financial sanctions.
Among the listed loss-making entities are several commercial banks, mining, tobacco and food companies as well as those involved in the production of alcoholic and soft drinks. They are widely believed to be lucrative businesses. Many of them claim to have operated without a profit due to substantial capital investments in the course of 2001. But some analysts call into question that justification.
Topping the list of the businesses in question is the Yerevan-based United Bank which went bankrupt last year. It posted 14.4 billion drams in losses. The bank is followed by the Hayenergo national power grid (12.7 billion drams) and Armenian Airlines (7 billion drams), the ailing state-owned carrier.