Civilnet
In 2012, the State Revenue Committee (SRC) implemented a new risk-based system to investigate the likelihood of corporate tax evasion. The State Revenue Committee is an extensive governing body responsible for overseeing the Tax Services and Customs Services of the Republic of Armenia. Although the system intends to reduce the risk of corruption, business entities linked to Gagik Khachatryan, the head of the State Revenue Services have been exempted from this new system.
The State Revenue Committee (SRS) has been carrying out inspections on a number of businesses since 2012 based on a system that was developed to determine the risk factors for tax evasion. The implementation of this system was to decrease corruption risks, however those companies who have links to the head of the SRS, Gagik Khachatryan have been left out of the Tax Service’s radar.
The head of the SRS approves the yearly plan of business inspections and assessments.
According to data published on the official website of the State Revenue Committee, in 2013, 9,000 inspections, 40 reviews and 9,600 assessments were conducted. In comparison to 2012 the number of inspections decreased by 27.5%, the number of reviews by 2.3% and the number of assessments by 27%.
Despite the fact that the Tax Service of Armenia carried out a large amount of work, they did not take any steps to inspect companies like Megafood, which imports candy and confectionary from large Russian and Ukrainian companies; Mega Motors, which is the country representative of Mitsubishi; Chronograph, which sells expensive watches and jewelry; Mega Sport sportswear and equipment store, and Ucom, a service provider for land phone lines and Internet access. All of the aforementioned business entities are connected to Khachatryan.
Although there may be legitimate reasons for not auditing companies linked to Khachatryan, the companies that were targeted for investigations are his competitors. For instance, the State Revenue Committee avoided auditing Ucom, but assessed Orange Armenia, Armentel, and GNC-Alpha (Rostelecom). All three companies offer similar services to Ucom. The two main competitors for Mega Food, Sovranto and Grand Candy, were also investigated.
Undeniably, there is a possibility that these companies have actually violated the law. However, the concern lies with the fact that tax inspectors can retrieve vital information through routine inspections, such as trade secrets; knowledge of such information can potentially be advantageous to competing firms, similar to those owned by and linked to Khachatryan.
It is highly likely that Khachatryan’s companies will not be subjected to tax inspections this year either because to date, they are not included in the yearly plan of inspections by the country’s Tax Services.
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