The answer to this question is that it’s impossible to get precise information because most of the businesses are shady. Even though the parliament is discussing a bill according to which physical persons must register their income, it will still be very difficult to assess people’s property even after the adoption of the law. Many people may disagree and say that the same goes for Russia, but Forbes publishes a list of Russia’s richest people anyway.
I must write about the methods used by Forbes to get the information in order to answer to this question. First, Forbes specialists find out where these rich people have stocks and what kind of companies they have. Later, they check the prices of those stocks in the stock market and then make their calculations. There are different factors defining the market prices of stocks, one of which is their profitability. This means that the real capital may differ from the market price. There are other methods too, for instance recently there were rumors claiming that international oil prices were going down, as a result of which “Gazprom” company’s prices for stocks fell down by almost $20 billion. As a result of such changes in stock prices, the rich may lose all they have in a short period, while others may get rich. People don’t want to lose their money and do their best to keep their stock prices high. In order to do that, they need to keep the reputation of their businesses high and show that the level of income they get from their stocks is high so that it doesn’t go down with the price.
This last factor doesn’t concern us, i.e. we don’t have a stock market in Armenia, thus we don’t have a problem with protecting business reputations. Local oligarchs are “small potatoes” compared to those in Russia and they can hardly sell their stocks in the biggest stock markets of the world. Armenian businessmen are interested in paying the least amount of taxes possible and it doesn’t matter whether the latter lowers their reputation or not. In developed countries, business owners hire good specialists to handle the businesses, and if they don’t accumulate enough profit or don’t increase the stock prices, they just fire them. In Armenia, business owners usually manage their businesses themselves, and the only thing they get out of is paying less taxes by registering their own private expenses as current expenses of their company. In this framework, many companies have a negative taxation balance at the end of the year. From this perspective, the taxation body publishes a list, where it has the names of those companies that had a negative balance exceeding the one million dram mark in order to make them feel “ashamed” of themselves and not do that anymore. There are currently 470 companies on the list. The first one in this list is the water company of Yerevan (17 billion dram) and the Rusal-Armental company (15.5 billion dram) comes in second.
There are big companies on this list such as “Armavia”, “Cigaronne”, etc. As for TV companies, two of them had a high negative taxation balance: R company (341.47 million) and ALM company (144.86 million).
Recently “Republic of Armenia” newspaper published a list of companies that paid over 50 million AMD in income tax. I was surprised to find out that “ArmRusGazard” company was included in both of the lists. At the end of the year, this company had a negative taxation balance covering 4.300 million dram, but the income tax it paid covered 96 million dram. The reason is the fact that regardless of how much income companies have, they have to pay 1% of their income as income tax. Armenian Development bank is in the same situation: its negative balance covered 1.1 billion dram, but it paid 2 million income tax.
As for the banking system, it is very important for banks to show that they pay high income taxes. Banks want to instill trust in the people and have a good reputation because people will not invest money in banks that have a negative balance. The only bank that has negative balance is Cascade Bank (34.86 million dram).
The first one on this list is the Zangezur copper-molybdenum company (it paid 13.89 million dram tax). The second one is Armentel (4.9 billion). There are 62 companies that paid over 50 million AMD in income tax and that’s not good for Armenia. Most of these companies are production businesses. On the one hand, i hope that there will be more companies on the list next year, but on the other hand, I kind of doubt that when looking at the currecny exchange rate changes.