Gas Operator Remains Armenia’s Top Taxpayer

ARG Remains Armenia's Top Taxpayer

YEREVAN (RFE/RL)—ArmRosGazprom (ARG), the Russian-dominated national gas distribution company, remains Armenia’s number one corporate taxpayer, having paid over 10 billion drams ($27 million) in various taxes and duties in the first half of this year.

ARG increased its tax contributions by roughly 13 percent each year and tops the latest taxpayer rankings released by the State Revenue Committee (SRC) on Tuesday, despite a further significant fall in natural gas consumption in the country.

The company spokeswoman, Shushan Sardarian explained to RFE/RL’s Armenian service, “that is mainly conditioned by the recent increase in the gas tariffs, as a result of which our value-added tax contributions have increased.”

Earlier this year, state regulators allowed ARG to increase its gas price for households by 37.5 percent because of the increased cost of Russian gas imports. The gas price for corporate consumers was raised by 17 percent. The unpopular price hikes took effect on April 1.

Gas consumption in Armenia already tumbled by 20 percent last year. ARG, 80 percent of which is owned by Russia’s Gazprom monopoly, blamed the drop on the economic recession and another surge in the price of imported Russian gas that went into effect in April 2009.

Yet despite incurring serious losses, the company ended up at the top of the 2009 taxpayer list. It was previously topped by K-Telecom, another Russian-owned company that runs Armenia’s largest mobile phone network.

K-Telecom is only fourth in the SRC’s 2010 rankings, with almost 7.3 billion drams paid in the first half. It was surpassed by the rival telecom operator ArmenTel and the Aleks-Grig company, which controls large-scale imports of basic foodstuffs into Armenia.

The country’s top ten taxpayers are also comprised of companies importing fuel and cigarettes, the country’s largest metallurgical enterprise, the national power utility and a tobacco factory. The SRC data shows that the total amount of taxes paid by them was up by 22 percent from the first half of 2009.

According to the Ministry of Finance, the Armenian government’s overall tax revenues rose at a slightly higher rate in January-May 2010. Increased proceeds from value-added tax, the largest source of those revenues, accounted for most of the gain.

By contrast, proceeds from corporate profit tax contributed only 16 percent of the total revenue and remained virtually unchanged in absolute terms during the five-month period.

Many large Armenian companies, especially those owned by wealthy businessmen with links to the government, have long posted suspiciously modest earnings. Prime Minister Tigran Sargsyan has repeatedly pledged to make them “the number one target” of his government’s crackdown on tax evasion.

The Flash Company, Armenia’s largest fuel importer occupying fifth place in the SRC list, paid only 7.4 million drams ($20,000) in profit and payroll taxes in the first half. City Petrol Group, its main rival that boasts the largest national network of petrol stations, paid less than half that sum.

Flash’s deputy director, Mushegh Elchian, claimed that both companies are barely making any profits at the moment. “Since competition has tightened, we now work without profits,” he told RFE/RL’s Armenian service. “Everyone wants to sell as much goods as possible, and in order to do that, you have to make prices affordable.”


Discussion Policy

Comments are welcomed and encouraged. Though you are fully responsible for the content you post, comments that include profanity, personal attacks or other inappropriate material will not be permitted. Asbarez reserves the right to block users who violate any of our posting standards and policies.