Georgian Government looks to liberalise Tax Code

The Georgian Government is planning to simplify the Tax Code and create better conditions to the business society.

Today, Georgia’s Prime Minister Giorgi Kvirikashvili announced the Government had started active works to liberalise the taxes following the Estonian model.

We are actively discussing to establish Estonian model in Georgia. In particular, the model comes to the income tax only in case of profit-sharing. Meanwhile, in case of the re-investing the companies will not pay the income tax. This will support to mobilise investment resrouces and the existing potential,” Kvirikashvili explained at today’s Government meeting.

The Prime Minister announced the Government would cooperate with the International Monetary Fund (IMP) representatives to Georgia to create the draft law. First it should be discussed at the Government meeting and then sent to the Parliament for further approval. Only after that the law would enter into force.

Meanwhile, a month ago Georgia’s Finance Minister Nodar Khaduri also talked about the simplifying of the country’s Tax Code. Khaduri announced the amendment would come into tax limitation period.

According to the amendment the six-year limitation period was reduced to three years. However, according to article 309, paragraph 62, the three-year term was regulated and defined as follows:

• From January 1, 2015 to January 1, 2016 period - 5 years and;
• From January 1, 2016 to January 1, 2017 period - 4 years.

The limitation of 6-year term was extended until 1 January 2015, while the 3-year shifting period would start from 1 January 2016.

The Minister added the tax audit process will become more time-limited in order to avoid "further problems” to the business society.

Proposed changes also considered scrapping several types of unpaid taxes, including unpaid tax debts that originated before 2011. As for the tax debts that were originated before 2013 they would be written off in case the taxpayer did not have any activities within the following period.

Changes also related to import tax. Khaduri said import would exempt from value added tax (VAT).

The Finance Ministry also announced income tax reform for this year.