476 Million Dram Damage: Abuses During the Operation of the Tsaghkadzor Ropeway

The Armenian Prosecutor General's Office has initiated a criminal case regarding the Tsaghkadzor ropeway's operations and the tax obligations of the companies involved, following a large-scale investigation by the Public Interests Protection Department. On April 26, 2019, the prosecutor of the department decided to send the case to the Investigative Department of the State Revenue Committee for further investigation, based on the characteristics outlined in Article 205, Part 2 and Article 184, Part 2 of the Armenian Criminal Code.

As a result of the investigation, it was revealed that the Armenian National Olympic Committee (ANOC) had entrusted the management of the ropeway to a limited liability company “L...” through a contract signed on December 15, 2008. It was found that from 2008 to 2016, the company had underreported profit tax obligations and failed to accurately calculate revenue from service provisions, amounting to 1,985,273,178 AMD, violating the provisions of the Law on Profit Tax in effect at the time. Moreover, a shortfall of 397,054,636 AMD was indicated in taxable objects/profit, leading to a calculated profit tax amounting to 79,410,927 AMD.

Additionally, the company did not properly assess the Value Added Tax as stipulated in Articles 8 and 23 of the Law on Value Added Tax, resulting in an obligation to pay 397,054,636 AMD to the state budget. Consequently, due to the failure of “L...” LLC to fulfill its tax obligations, the state suffered a total damage of 476,465,563 AMD.

On November 8, during the ongoing investigation led by the prosecutor responsible for economic crimes within the Armenian Prosecutor General's Office, a decision was made to charge A.P., who served as the director of “L...” LLC from December 2008 to September 2017, for committing crimes under Article 205, Part 2 and Article 184, Part 2, Clause 1 of the Armenian Criminal Code.

Evidence gathered in the investigation indicates that A.P. instructed the company’s ticket vendors to not issue receipts for sums paid by customers or to provide distorted fiscal reporting data upon customer request, with the intention of avoiding tax payment. As a result, the company reported false data in tax filings for profit tax and Value Added Tax from 2008 to 2016, leading to a significant shortfall in revenue that enabled them to evade payment of 476,465,563 AMD in taxes.

Moreover, the former director is suspected of abusing the trust of responsible persons at the ANOC, which holds a 50% stake in “L...” LLC, leading to a significant property damage estimated at 79,410,927 AMD, by intentionally concealing the actual amount of revenue. A.P. has been put on the wanted list, and a request has been submitted to the court to place him in custody as a preventive measure.

Note: The suspect or accused is presumed innocent until proven guilty according to the procedure established by the Armenian Criminal Procedure Code through a legally binding court decision.