By Emil Danielyan
A German-owned company mining copper and molybdenum remains Armenia’s largest corporate taxpayer, having contributed 22.7 billion drams ($60 million) to the state treasury during the first nine months of this year, official statistics show. The Zangezur Copper and Molybdenum Combine continues to be followed by two other foreign-owned companies, the ArmenTel telecommunications operator and the ArmRosGazprom natural gas distributor. According to the figures provided to RFE/RL by Armenian tax authorities, they have paid 13 billion drams and 8.3 billion drams respectively during the same period.
Also high on the official list of the country’s 300 largest taxpayers are two fuel importing companies, two tobacco firms, the national power utility, a mobile phone operator, the Metsamor nuclear power plant, the Zvartnots international airport, a brandy distillery and even a car dealership. But the amount of various taxes and customs duties paid by each of them pales in comparison with Zangezur’s contribution to Armenia’s national budget.
The mining giant is based in the southeastern town of Kajaran and employs thousands of people. It was privatized in December 2004 for $132 million by a consortium of local and foreign investors led by the German metals group Cronimet. The latter owns 75 percent of the company, both directly and through its Yerevan-based Makur Yerkat smelter.
The Armenian government is on track to increase its still modest tax and customs revenues by 20 percent to 375 billion drams (almost $1 billion) this year. It will need to achieve a similar increase next year in order to successfully implement its 2008 budget projected to be worth about $1.5 billion.
At the urging of the World Bank and other Western donors, the government began publicizing two years ago the list of the top taxpayers as part of its declared crackdown on endemic tax evasion. It was hoped that the “name-and-shame” policy will embarrass the country’s wealthiest citizens that are believed to grossly underreport their earnings. Government officials and some donors say that this measure alone has forced them to pay more taxes.
The head of the State Tax Service (STS), Felix Tsolakian, insisted this week that no Armenian company is now off limits to tax inspectors. “Today tax inspectors have no trouble entering one or another business,” Tsolakian told RFE/RL in an interview.
Still, the latest rankings released by his agency show that many of Armenia’s government-connected tycoons continue to post modest profits contrasting with their conspicuous wealth. Gagik Tsarukian, arguably the most influential and ambitious of the so-called “oligarchs,” is a case in point. The biggest of the companies that are known to be owned by him, Multi-Leon, occupies a lowly 76 place in the STS list, with only 411 million drams ($1.1 million) in taxes and other duties paid from January through August.
Another Tsarukian-controlled business, a big cement factory located in the southern town of Ararat, paid 248 million drams, or even less than Yerevan State University. The factory is thought to be operating at full capacity thanks to Armenia’s construction boom and growing cement exports to neighboring Iran and Georgia.
The modest taxes sharply contrast with sums spent by Tsarukian on the ongoing massive distribution of wheat, potato seeds and other agricultural aid to thousands of farmers across the country reeling from last summer’s severe drought. The aid, heavily advertised by Tsarukian-funded media, is being handed out under the aegis of his Prosperous Armenia party that intends to do well in next year’s parliamentary elections. Some leaders of Armenia’s mainstream opposition parties have already denounced it as a large-scale vote buying operation.