Gov’t looks to amend Georgia’s Tax Code

The Georgian Government is planning to amend the country’s tax law. 

At the end of today’s Governmental meeting Georgia’s Minister of Finance Nodar Khaduri announced changes to the Tax Code would be enforced in the near future. The changes would "create a more fair and effective legal basis for administration and liberalise fines and sanctions,” he said. 

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. 

He said the Deep and Comprehensive Free Trade Area (DCFTA) agreement Georgia recently signed with the European Union (EU) allowed the Government to promote enterprises that functioned in this way. For this reason, the Ministry decided to initiate these changes to make such processes exempt from VAT. 

On another note, another amendment to the Tax Code envisaged simplifying the mechanisms for tourism enterprises to meet their tax obligations. 

"The trend of building tourist accommodation and then selling individual rooms in them became quite developed at Georgia’s resorts last time. Meanwhile, the owners can rent those rooms when they are not using them. This causes the need to impose preferences and simplify tax administration for these cases,” the Finance Minister explained. 

Khaduri believed representatives of small businesses would be interested in another amendment, which would ensure tax liabilities that do not exceed 5,000 GEL may be deferred without any additional collateral, according to a decision by the Revenue Service of Georgia.  

Proposed changes also considered scrapping several types of unpaid taxes, including unpaid tax debts that originated before January 1, 2005 in case the taxpayer did not have any activities within the following period. 

Unpaid taxes could also be written off if they related to recognized tax liabilities that arose prior to January 1, 2009 and accrued fines and penalties prior to January 1, 2005 in case the taxpayer did not have any activities during the following period. 

Changes also related to accrued and unpaid fines imposed on an individual for violating cash register rules prior to January 1, 2013.