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Government Details First Results Of Crackdown On Tax Fraud


Armenia - Tax inspectors raid the offices of the GLG Project company linked to a brother of former President Serzh Sarkisian, 23 June 2018.

Armenian Prime Minister Nikol Pashinian said on Tuesday that his government has recovered more than 20 billion drams ($42 million) of unpaid taxes in less than two months.

Pashinian attributed that to an ongoing “fight against corruption, abuses and the shadow economy.” “This is a very important indicator, and I think that we must keep up our efforts in this direction,” he said at a weekly cabinet meeting in Yerevan.

Davit Ananian, the head of the State Revenue Committee (SRC), specified that the sum equivalent to almost 1.8 percent of Armenia’s 2017 tax revenue was collected from 73 companies accused of tax evasion. They have been investigated by not only the SRC but also the National Security Service (NSS) and the police, he told cabinet members.

Ananian singled out a tax fraud case brought against a customs brokerage company reportedly linked to his predecessor, Vartan Harutiunian.

The NSS claimed in late May that the company, Norfolk Consulting, has evaded $7 million in taxes since being set up last summer and obtaining exclusive rights to process imports from China, the United Arab Emirates and Turkey. Norfolk’s executive director, Armen Unanian, and two chief accountants were arrested at the time. They all were freed a week later after Unanian agreed to transfer the allegedly unpaid taxes to the state.

In mid-June, the SRC accused two other customs brokerage firms of failing to pay more than 2 billion drams in taxes.

Armenia’s leading food supermarkets have been the other major targets of the new government’s stated crackdown on tax evasion. They have agreed to pay hefty fines despite insisting that they stuck to taxation rules that were set by the previous government.

Ananian promised a tougher crackdown on companies and individuals underreporting their earnings when he was appointed as head of the SRC in late May. He said that the government’s tax revenue will be “substantially higher than planned” this year. It rose by more than 7 percent in 2017.

Pashinian said on Tuesday that the unpaid taxes detected by the law-enforcement authorities will be added to Armenia’s 2018 state budget. In particular, he said, the government will allocate 10 billion drams ($21 million) in additional subsidies to impoverished communities outside Yerevan.

The premier also stressed: “This figure [$42 million] doesn’t include illegal enrichment and embezzlement cases and cases involving other corrupt practices, which are also extremely large in scale. This process will definitely continue, and we will recover very serious sums and reverse damage inflicted on the state.”

The most high-profile probes of “illegal enrichment” launched to date involve former President Serzh Sarkisian’s former chief bodyguard, Vachagan Ghazarian, and brother Levon.

Ghazarian was arrested late last month after the NSS confiscated more than $2 million worth of cash from him. According to the NSS, he claimed to have “forgotten” to add this and other money to his official income declarations.

Around the same time, the SRC discovered documents showing that Levon Sarkisian and his two children hold nearly $7 million in an Armenian bank. Sarkisian and his daughter are now facing prosecution for their failure to disclose these sums to a state anti-corruption body.

An Armenian court issued an arrest warrant for Levon Sarkisian on Saturday. He has still not been arrested, however, suggesting that he may have fled the country.

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