THE OTHER SIDE OF FAKE DAMAGES
By Mher Ohanian

Yerkir.am
August 25, 2006

Hiding profits and stating damages through inflated expenses is
something that is widespread among the business community.

Businessmen in both the developed countries and developing ones
attempt to profit from doing so. Governments, in turn, try to thwart
tax evasion cases through laws and tax administration. It looks like
the Armenian tax authorities are trying to do the same.

Judging by the "List of taxpayers who have stated damages in 2005,"
released by the State Tax Service, one gets an impression that the key
goal of the Armenian businessmen is to get damages instead of profits.

It turns out that any business – production of mineral water,
beer or soft drinks, jewelry, import of gasoline or real estate —
is non-profitable in Armenia. The same goes for bottling Coca Cola
or selling Mercedes or even owning markets. To cut it short, every
business in Armenia is loss-making, according to that list.

Apparently, our businessmen least interested in their images: what’s
more important is making mega profits taking advantage of the loopholes
in the legislation.

Most of the businesses operating in such lucrative sectors as
construction, transportation, production of soft drinks, import of
cigarettes and others have stated petty profits thus paying more than
modest taxes.

Even those tycoons, who are also legislators, are not shamed of
registering their businesses in offshore zones, and by taking advantage
of the laws they have passed evade taxes.

None of those businesses have declared themselves bankrupts and
no court has ever ruled them bankrupt. Those businesses continue to
flourish and their owners make mega profits because they have powerful
protection or pay bribes to tax authorities.