They are believed to be among local firms that have been re-exporting Western-manufactured goods to Russia since the outbreak of the war in Ukraine. Such trade operations explain why Armenia’s overall exports to Russia tripled last year and January-May 2023, translating into double-digit economic growth in the South Caucasus country.
According to the State Revenue Committee (SRC), the largest network of mobile phone shops in Armenia paid 15.8 billion drams ($40 million) in taxes in the first half of 2023, or nearly as much as it did in the whole of 2022. As a result, the company running the network, Mobile Center, became the country’s sixth largest corporate taxpayer. Its tax contributions totaled only 4.4 billion drams in 2021.
Vesta, a major electronics chain, is seventh in the first-half tax rankings released by the SRC this week. The tax and customs services collected 15.7 billion drams from it, or twice as much as in 2022.
Suren Parsian, an economic analyst, said on Thursday that their extra revenue was generated not only by re-exports but also Russian consumers buying such goods during trips to Armenia.
Armenian firms importing Western cars posted similarly sharp gains in their revenue. Avangard Motors, the local dealer of Germany’s Mercedes-Benz, paid 3.7 billion drams in first-half taxes, up from just 900 million drams in 2021. The tax contributions of the Toyota Yerevan car dealership likewise rose from 2.3 billion drams in 2021 to about 5 billion drams ($13 million) in January-June 2023.
Both Mercedes-Benz and Toyota stopped directly supplying their cars to Russia following the Russian invasion of Ukraine.
Armenia - Car carrier trailers line up near a customs terminal outside Gyumri, March 13, 2023
The SRC recorded last year a nearly six-fold increase in the number of mostly second-hand cars imported to Armenia. Its customs division struggled to cope with the rapid growth which has continued this year.
The Armenian government has faced in recent months strong pressure from the United States and the European Union to curb the re-export of hi-tech goods and components which the Western powers say could be used by the Russian defense industry. The government announced in late May that Armenian exporters will now need government permission to deliver microchips, transformers, video cameras, antennas and other electronic equipment to Russia.
James O’Brien, the sanctions coordinator at the U.S. State Department, visited Yerevan late last month to discuss the issue with Prime Minister Nikol Pashinian and other Armenian officials.
Pashinian said in May that despite its “strategic” relations with Russia, Armenia “cannot afford to be placed under Western sanctions.” “Therefore, in our relations with Russia we will act on a scale that allows us to avoid Western sanctions,” he said.
So far Washington has blacklisted only on one functioning Armenian company for allegedly helping Russia evade the sanctions. The Yerevan-based company, Medisar, imported chemicals and laboratory equipment from the U.S. as well as the EU.