Mining Giant Becomes Armenia’s Top Taxpayer

An Armenian mining enterprise replaced the national gas distribution network last year as the country’s largest corporate taxpayer, a senior government official revealed on Wednesday.

Rafik Mashadian, the deputy head of the State Revenue Committee (SRC), said that the Zangezur Copper-Molybdenum Combine (ZCMC) more than doubled its tax payments, to 51 billion drams ($105 million), in 2018.

“This company had the largest increase [in tax payments,]” Mashadian told RFE/RL’s Armenian service.

The sharp rise contrasted with a 10 percent drop in the combined 2018 output of Armenia’s mining and metallurgical companies. They still accounted for more than 40 percent of Armenian exports.

Located in Kajaran, a small down in the southeastern Syunik province, ZCMC reportedly employs more than 4,000 people. A German company, Cronimet, nominally owns 75 percent of it.

The rest of ZCMC is controlled by at least two obscure Armenian firms. Ownership of those firms has long been a subject of speculation, with some local commentators and opposition politicians linking them to former President Serzh Sarkisian or his predecessor Robert Kocharian.

According to the SRC, Armenia’s largest cigarette manufacturer, Grand Tobacco, also significantly increased its tax contributions and became the second largest taxpayer in 2018. It is followed by Gazprom Armenia, the national gas network owned by Russia’s Gazprom giant. Gazprom Armenia had paid more taxes than any other local firm in 2017.

The Armenian government’s overall tax revenue was up by more than 14 percent, at 1.3 trillion drams ($2.7 billion), last year. Large companies generated about three-quarters of it.

Mashadian attributed the increase to economic growth and a tough crackdown on tax evasion declared by the government.

Vahagn Khachatrian, an independent economist, said while the figure is encouraging he is puzzled by a surge in taxes collected by the SRC in December. He wondered if the SRC is continuing to force businesses to pay taxes in advance of their anticipated earnings.

“I’m worried that that vicious practice of advance payments [collected from companies] may have continued,” Khachatrian told RFE/RL’s Armenian service.

Mashadian ruled out that. “Media claims that the SRC is meeting its targets by pressuring businesses are not true,” insisted the SRC official.

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