Georgia’s Gov’t takes action to revive real estate sector

Georgia’s Prime Minister Irakli Garibashvili is introducing two initiatives at today’s Government meeting which aim to stimulate the country’s real estate sector and improve the country’s image.

One initiative involved reducing taxes for landlords who rented out an apartment, while the other foresaw removing all state liabilities for companies who were unable to complete construction works for projects that began before August 2008.

Under the first new initiative, landlords who rent out an apartment in Georgia will be taxed five percent instead of 20 percent. PM Garibashvili said this would benefit landlords, who also had to pay taxes on their own properties.

The second initiative aimed to revive the construction sector in Georgia and drive construction companies to complete their work. In this respect, the Georgian Government decided to exempt all building companies who had started some sort of construction project before 2008 but for some reason were unable to finish, from their state obligations.

Due to the accumulated liabilities which construction companies owe to the state, they cannot finish the construction works and this hampers sector development, Garibashvili explained.

"Bank credit tightening as well as reduced demand in the real estate sector seriously affected the construction sector, which led to the accumulated liabilities. This is a heavy burden for them,” Garibashvili said.

"To solve this problem and encourage construction companies to continue their works, the Government decided to exempt them from their liabilities, including value-added taxes (VAT) and K2 fees,” Garibashvili said.

"This initiative will have a very positive impact on the construction companies to complete their works and improve the city’s image,” he added.