Georgia’s economic team is working on modifying the country’s income tax rules, with the main goal to improve the investment climate, attract more investors and additional capital to the country.
The country’s Finance Minister Nodar Khaduri spoke about the efforts taken by the economic team to amend Georgia’s Tax Code at today’s Governmental meeting.
The amount of money directed to the development of the economy, expansion of enterprises and increasing employment will not be taxed anymore,” explained Khaduri.
More specifically, the amendments aimed to liberalise income tax.
If companies reinvest their profit, they will no longer be obliged to pay income tax. In other words, if you do not receive a dividend from your company, you do not pay income tax meaning that you do not pay tax for the reinvested money,” Khaduri said.
A dividend is a sum of money typically paid annually by a company to its shareholders out of its profits.
However, Georgia’s tax rules will not change for companies or individual entrepreneurs who are prohibited from profit-sharing.
For example these are the individual entrepreneurs, insurance and micro financing organisations, banks, public legal entities and non-profit organisations,” said Khaduri.
Georgia’s economic team created these amendments to align the country’s tax system with the Corporate Income Tax (CIT) – the Estonian Taxation Model.
As well as the Estonian Taxation Model the country’s economic team also worked to improve Georgia’s tax administration.
In particular, amendment to Georgia’s Tax Code involved tax inspection.
Currently tax investigation is run by the Investigation Service however if the amendments are approved, this will move under the Revenue Service’s control. Both services are branches of Georgia’s Ministry of Finance.
The third amendment announced by the Finance Minister today related to bank account sequestration.
[Confiscation] of banking accounts will be applied only following the court’s decision, while today the Revenue Service is allowed to sequester bank accounts without the court’s involvement [permission]. The Revenue Service still will be able to do this only if it gets permission from a court within 48 hours of the sequestration,” said Khaduri.
Georgia’s economic team will now send the draft law to Parliament for approval. If Parliament approves the draft law will come into force in July 2016.
The Government of Georgia started working on simplifying the country’s Tax Code after signing its Association Agreement (AA) deal with the European Union in 2014.