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Tax Code amended

By Tatia Megeneishvili
Monday, August 11
Finance Minister Nodar Khaduri stated on August 7 that amendments have been introduced to the Tax Code that will bring the country close to European standards and create more economic benefits for Georgia. The parliamentary minority do not know yet whether they will accept the changes or not. Some analysts welcomed the amendments, other believe that systemic changes are required.

One of the main amendments to the Tax Code would ensure services rendered for the internal processing of goods will be exempt from value added tax (VAT).

"In some cases, foreigners bring raw materials into Georgia and Georgian enterprises process those raw materials then give them their final shape before heading back to be exported. Any export will be exempt from value added tax while some services might not be exempt as well,” Khaduri said.

“The Deep and comprehensive free trade agreement with the EU allows us to encourage such enterprises in Georgia,” Khaduri said.

The Finance Ministry did not provide a figure of how much is collected annually from this type of value added tax. The initiative also envisages writing-off fines imposed before January, 2013 on individual entrepreneurs for violating rules of use of cash registers.

The proposal also involves cutting unpaid taxes accumulated before January, 2005 by those taxpayers, who have had no business activity since that date, as well as abolishing penalties on unpaid taxes since January, 2009 if since that date a taxpayer has had no business activity.

Parliamentary majority member Zurab Tkemaladze states that the amendments are important and the Georgian Dream coalition will support them.

Member of the parliamentary minority Zurab Japaridze stresses that the amendments should be discussed.

“It might convey certain risks towards some businesses, and might create an unequal business environment. Such risks should be addressed,” Japaridze said.

Economic Analyst Irakli Lekvinadze welcomed the changes, stating that enforcement of fines was quite difficult for the Ministry of Finance.

Fellow analyst Paata Sheshelidze believes that such changes should cover all business and not only certain directions.

“For achieving important goals, systemic changes are required,” Sheshelidze states.