Oligarch Samvel Aleksanian’s Company Accused Of Tax Fraud

As part of its declared crackdown on corruption, Armenia’s National Security Service (NSS) on Wednesday accused a company controlled by wealthy businessman Samvel Aleksanian, linked to the former ruling Republican Party (HHK), of evading millions of dollars in tax payments.

It claimed that Aleksanian’s Alex Holding group colluded with the former leadership of the State Revenue Committee (SRC) to run a tax scam in the country’s largest food supermarket chain owned by it.

The NSS detailed the accusations after raiding the head office of the Yerevan City chain and confiscating documents kept there. It reported no arrests, saying only that senior company executives have been questioned as part of the criminal investigation into “large-scale tax evasion” and “false entrepreneurship.”

An NSS statement said the company has illegally sold agricultural products and “numerous” other items at Yerevan City supermarkets through 461 small firms mainly registered in the name of its employees and their family members. Some of those workers were not even aware of that, it said.

Under Armenian law, small firms with an annual turnover of up to 115 million drams ($237,000) are exempt from profit and value-added (VAT) taxes paid by larger businesses. They are only required to pay “turnover tax” equivalent to 2 percent of their revenue.The VAT rate is set at 20 percent.

The NSS statement said the fraud scheme has enabled Alex Holding to avoid making an estimated 7.2 billion drams ($15 million) in VAT payments since the end of 2016. A tax audit will determine “the precise amount of the damage inflicted on the state,” according to the powerful security agency.

Aleksanian, 49, is one of Armenia’s richest men who has long effectively controlled lucrative imports of sugar, cooking oil and other basic foodstuffs. He has had close ties with the country’s former leaders, notably former President Serzh Sarkisian. The tycoon has been a parliament deputy representing Sarkisian’s HHK since 2003.

The NSS claimed that the SRC, which collects taxes and other duties in the country, also allowed 11 other large retailers to use the same method of tax evasion. It advised them to voluntarily “re-calculate” their tax obligations before being inspected by the NSS in the coming weeks.

The SRC’s previous head, Vartan Harutiunian, and his two deputies resigned shortly after Nikol Pashinian was elected Armenia’s prime minister on May 8. The latter have been questioned in a separate NSS investigation launched earlier this month.

The NSS arrested late last week three senior executives of a customs brokerage company accused of failing to pay millions of dollars worth of taxes. The company’s executive director is a figure close to Harutiunian. The former tax chief has not been questioned or indicted so far.

Artur Vanetsian, the new NSS director appointed by Pashinian, announced the unprecedented crackdown on corruption and tax fraud on May 19. The NSS said on Wednesday that it is determined to continue the “consistent fight against corruption and economic crimes.”