The National Security Service adjunct to the Prime Minister of the Republic of Armenia, continuing a consecutive fight against corruption and economic crimes, as a result of operative-search measures and investigation activities conducted within the implementation of its functions, uncovered a scheme (mechanism) developed and implemented for a long time, by Armenian major business entities during their activity for tax evasion purposes. Sole proprietors (SPs), conducting actually false entrepreneurial activity and founded in the names of hundreds of citizens, were used for the implementation of the scheme.
According to the obtained preliminary data, Alex Holding, LLC, being a VAT paying organization, back in the end of 2016, under the pretense of not causing price increase on local agricultural products, came to an agreement with the former leadership of the RA State Revenue Committee (SRC) to sell the agricultural products, bought from villagers, from the Yerevan City supermarket chain through SPs established in the names of different persons; the rate of the turnover sale was 115 mln. Armenian drams, which enabled to pay only 2% of turnover tax instead of 20 % of VAT and income tax. Then, the leadership of Alex Holding, LLC till May 2018 included, registered 461 SPs in the names of the employees of their company, as well as of their family members with the same notary; those SPs conducted activity in the Yerevan City supermarket chain. With that, a part of them was registered without the knowledge of the citizens, by using their identity papers or their copies kept in Alex Holding, LLC. When the turnover of SPs reached 115 mln. Armenian drams, their activities were ceased or they were dissolved, after which other newly registered SPs were used.
By using the legally groundless, arbitrary and illegal opportunity provided to them by the former leadership of the RA SRC, Alex Holding, LLC, in addition to local agricultural products, sold, in the names of the above-stated SPs, also various other products and imported agricultural products, paying for them as well only the turnover tax.
According to preliminary estimations, the turnover of the total sale with 461 SPs was more than 40 billion drams, of which 2 % turnover tax was paid, but if legal activities had been conducted, Alex Holding, LLC was to pay 20 % VAT and income tax of that sum.
The specialized (tax) inspection and the forensic accounting examination, set in a prescribed manner, of Alex Holding, LLC activities will calculate the accurate amount of the damage caused to the State.
A criminal case on the fact was is instituted in the Investigation Directorate of the NSS of RA, under part 2 of Article 205 (Evasion from taxes, duties or other mandatory payments) and part 3 of Article 189 (False entrepreneurial activity).
Within the framework of the criminal case 10 searches were simultaneously conducted as a result of which accounting documents, electronic data carriers, other documents of evidentiary significance for the case were seized; the following individuals were interrogated: the designated employees for the activity of Alex Holding, LLC, the notary who had registered the SPs, as well as a part of those citizens in whose names SPs were registered.
Besides that, according to reliable data, another 11 major organizations engaged in chain retailing were given a possibility, by the former leadership of the State Revenue Committee of RA, to conduct activities in the described manner, which created obviously unfavorable and unequal competitive conditions for many other companies working on VAT and selling agricultural products. Within the framework of the criminal case, inspection activities were conducted with respect to the given 11 companies; hence, they are offered to calculate by themselves the amount of the unpaid ,in this way, taxes and to provide corresponding information to the body of preliminary investigation to settle the issue of the reparation of the damage within the framework of the investigation.
The preliminary investigation goes on; measures are taken to establish all the circumstances, significant for the case, and other associated persons, as well as to fully compensate the damage caused.
The National Security Service urges business entities to conduct activities solely in the legal, so-called white field and refrain from using suspicious schemes and mechanisms to maliciously evade paying taxes, duties or other obligatory payments. At the same time, the NSS warns that the corresponding units of the National Security Service of RA, acting within the limits of their authorities and solely in a manner prescribed by the law, will conduct a consistent fight to eliminate shadow economy, as well as corruption protectionism.

Note: The suspect or accused of an alleged crime is considered innocent as long as his guilt is not proven in a manner prescribed by the Code of Criminal Procedure of RA - by the court decision entered into legal force.