Response of the State Revenue Committee to the Statements of Spayka

On April 5, 2019, at a press conference called by Spayka LLC, several groundless assessments and claims were made, which the State Revenue Committee (SRC) finds necessary to address point by point.

1. Criminal prosecution has been suspended, but charges are still being brought in the same case.

The SRC's investigative department decided on September 4, 2018, not to carry out criminal prosecution against Spayka LLC and other companies; however, the criminal case has not been dismissed, and the preliminary investigation continues. Moreover, the suspension of criminal prosecution pertains to other incidents unrelated to the charges in question.

2. The basis for the charges is solely the expert conclusion.

We inform you that the tax, duties, or mandatory payments amounting to 7,036,666,312 AMD and the basis for the charges are grounded in numerous initial data obtained during the criminal case, including documents received as a result of inquiries made to foreign states.

3. Regarding the lack of familiarity with the expert conclusion.

Mr. Davit Venger Ghazaryan was not acquainted in advance with the decision to appoint an expert examination and the conclusion of the expert, as per Article 247 of the Criminal Procedure Code of Armenia. According to this article, the suspect, accused, and victim have the right to familiarize themselves with the investigator's decision to appoint the examination and to obtain clarification of their rights before the examination is conducted, and to review the expert conclusion within 10 days from the day of receipt. It should be noted, however, that on the day of appointing the forensic accounting examination, Davit Venger Ghazaryan had the status of a witness and therefore did not exercise the above rights. He was only involved in the case as an accused on April 4, 2019, and on the same day was acquainted with the decision to appoint the forensic accounting examination and the expert conclusion. He is still not deprived of the opportunity to present arguments and submit motions.

4. The calculation of about 5 billion AMD in VAT pertaining to the damage caused to the state of 7,036,666,312 AMD is unfounded, considering the provisions of Article 74 of the Tax Code of Armenia.

It must be noted that the VAT paid at the time of import is subject to refund when executing transactions at a zero VAT rate (such as exports). However, during the period of execution of these transactions from January 1, 2015, to January 11, 2016, the legislation required the presentation of certain documents to the tax authority during the importation, specifically:

• a) Import tax declarations,
• b) A statement regarding the import of goods and payment of indirect taxes,
• and payment of the VAT amounts to the state budget.

After fulfilling the above conditions, in the case of exporting goods, it was necessary to present the following documents to substantiate the application of the zero VAT rate and to recover the specified amounts:

• a) Export tax declarations,
• b) The declaration prepared by the importer regarding the import of goods and payment of indirect taxes, as established by the tax authority of the place of registration of the importer (in this case, the taxpayer from a member state of the EAEU).

Therefore, the application of the zero VAT rate and the refund is only possible if the above conditions are met.

5. The SRC seems to have forgotten that the export of agricultural products is exempt from income tax.

It should be clarified that the exemption provided under Article 36 of the Income Tax Law of Armenia in force at the time of the legal relationship, as well as the currently applicable Article 126 of the Tax Code of Armenia, pertains to taxpayers engaged in the production of agricultural products. Therefore, this exemption does not apply to importers of agricultural and other products who later export them.

6. The expert conclusion was delivered within tight deadlines.

This may be due to the simplicity of the calculation and the availability of extensive documents underlying it.

7. They know very well who was “sitting in which room.”

This can basically be interpreted as information on a crime that the person providing it is aware of, and we urge them to definitely present it in the context of the criminal case. Meanwhile, necessary investigative and operational-search measures are being conducted by the SRC’s investigative department to clarify the circle of individuals committing the offense.

We do not consider it unnecessary to emphasize that the request made by the investigator to select arrest as a preventive measure is not based on the failure to pay the calculated taxes, duties, or mandatory payments of 7,036,666,312 AMD, together with penalties by Davit Venger Ghazaryan, the director of Spayka LLC, but rather based on the mandatory requirements specified in Article 135 of the Criminal Procedure Code of Armenia for the application of preventive measures, the evidence of which has been submitted to the court.

At the same time, we urge not to misappropriate the issues existing in the company and not to attempt to influence the investigation of the criminal case, especially since the SRC investigative department or any other unit has no complicity in the created situation.

Information from the SRC

and the Department of Information and Public Relations