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Armenia’s Russia-Owned Gas Operator Accused Of Tax Evasion

Gazprom Armenia's General Director Hrant Tadevosian

YEREVAN -- Tax authorities in Armenia have accused the South Caucasus country’s national gas distribution company, which is owned by Russia’s Gazprom giant, of evading millions of dollars’ worth of taxes.

The State Revenue Committee (SRC) announced the launch of criminal proceedings against the Gazprom Armenia operator on November 14. The SRC claimed that the company inflated its expenditures and under-reported its earnings in 2016 and 2017. It said that translated into “several billion drams” in unpaid taxes.

No Gazprom Armenia executives have been formally charged yet.

The head of the SRC’s investigative division, Eduard Hovannisian, told RFE/RL’s Armenian Service on November 15 that tax inspectors are still ascertaining the scale of the alleged tax evasion. “The criminal investigation has only just started,” he said.

Gazprom Armenia strongly denied the accusations. “I insist that they are baseless,” its chief executive, Hrant Tadevosian, told a news conference.

“Our company has repeatedly received SRC certificates of a ‘law-abiding taxpayer,’ most recently in September,” he said.

Tadevosian also accused the Armenian tax and customs services of damaging the gas operator’s business reputation. He claimed that the criminal case has called into serious question Gazprom Armenia’s plans to obtain a multi-million-dollar loan from a Russian commercial bank.

The SRC brought the tax fraud case amid ongoing negotiations between the Armenian government and Gazprom on the price of Russian natural gas delivered to Armenia. The most recent Russian-Armenian gas agreement set the price at $150 per thousand cubic meters. It expires in December.

The government hopes that Gazprom will cut the tariff or at least keep it unchanged. The Russian gas monopoly has given no indication of its intentions thus far.