Criminal Scheme in Armenia: Vodka Producing Company Hides 3.2 Billion Dram in Taxes

A company engaged in vodka production in Armenia has concealed approximately 3.2 billion drams in taxes from the state through a criminal scheme. This information was reported by the Investigative Committee of the Republic of Armenia.

It has been revealed that the company 'R...' owned by individuals R.G. and N.H., which has been operating in the field of alcohol distillation and vodka production for many years, acquired around 1,200 tons of alcohol without accounting documents between 2017 and 2021.

To create an illusion of the legal circulation of spirits, the two individuals entered into a criminal agreement with A.G., who has been active in the alcohol drinks sector for many years. They agreed to set up companies under the names of various individuals for a specific payment and carry out the circulation of about 1,200 tons of alcohol through these companies.

In 2017 and 2019, two companies received state registration and obtained licenses for alcohol distillation and vodka production. Later, to avoid paying possible tax obligations, A.G. appointed individuals suffering from mental illness as directors of these companies.

“From November 2017 to May 2018, as well as from December 2019 to May 2020, the real operators of 'R...' issued tax invoices for a total of approximately 1,140 tons of 'phantom' alcohol at 96 percent purity under the names of the two companies, but the actual supply of spirits was carried out by the 'R...' company. In return, these companies issued tax invoices for a total of about 1,515,000 bottles of vodka,” the statement said.

One of the mentioned companies has since been dissolved, while the other is in the process of liquidation. The same criminal scheme was applied in March 2021. In this instance, a new company, registered in 2016 and possessing excise stamps, was involved. With the aim of continuing the activities of the liquidating 'R...' company, a new company 'E...' was founded by R.G. in March 2021. The director of that company was given 444,660 excise stamps received in the name of the aforementioned company, which were used to produce vodka at the production address of another company, but labeled under the other company’s name.

Approximately 1,862 bottles of vodka were sold to various businesses engaged in retail trade within the territory of Armenia, while 2,798 bottles produced were discovered during a raid, and 440,000 excise stamps were handed over to the investigative authority. The criminal scheme has been fully uncovered, and the circle of individuals involved has been identified. Criminal proceedings have been initiated against four individuals. The persons involved in the criminal mechanism have provided confessional testimonies.

The Republic of Armenia's State Revenue Committee has received amended calculations and reports, which revealed that the actual owners of the companies 'R...' and 'E...', R.G. and N.H., have evaded paying taxes amounting to 2,381,238,862 drams, which, together with fines calculated at 811,817,885 drams, totals 3,193,056,747 drams. During the investigation, 1,671,527,000 drams of the damage already caused to the state has been recovered, which is directed towards the settlement of tax obligations, while a payment schedule has been established for the remaining amount. The investigation is ongoing.