Tax Preferences for TV Channels Are Illegal
18 October, 2012
Tax Preferences for TV Channels Are Illegal


A tax preference given to Georgian TV channels are illegal and undermines the  competitive climate in the country. 

Former government decided to make its last “gift” to Georgian TV market:  on October 15, 2012, Aleko Khetaguri, ex-finance minister of Georgia, announced his decision to cut down the past-due tax liabilities as well as volume of sanctions fixed on past-due arrears to TV companies across the country.


He did not elaborate details of the preference; neither did the Ministry of Finance (MOF) disclose

more details later with Georgian Journal or any other media. MOF stressed that all details are included in the official statement of Khetaguri. Khetaguri believes the decision will put Georgian TV channels in equal competitive condition and will encourage market development.

“It alleviates financial obligations of  both central and regional TV companies and puts them in equal taxation conditions that will ensure stable financial conditions of broadcasting companies, encourage TV market development and boost the competition. Broadcastings will be able to attract new investments,” Khetaguri stated and reminded the public that similar tax preference took place in 2010 and both central and regional broadcasting enjoyed this privilege.

The suggested tax preference bewildered law-obedient tax-payers including so-called opposition TV channels as of Maestro and Kavkasia. They find the initiative illegal and believe the ex-government tries to amnesty Rustavi 2 and Imedi channels largely known as pro-ex-governmental companies. Former members of government connected with the ex-government and President of Georgia, Mikheil Saakashvili, hold shares at Rustavi 2 and Imedi officially. Kavkasia and Maestro believe Saakashvili himself is the de-facto owner of the questioned TV channels that are the most non-obedient tax-payers as the research of Transparency International Georgia (TI Georgia) suggested in this past summer.

Based on the web-site of Revenue Service of MOF, Imedi owes GEL 13.9 million in taxes, Rustavi 2 - GEL 5.5 million and the budgetary-based Georgian Public Broadcast (GPB) - GEL 3.5 million. According to the TI Georgia research the said liabilities accrued since a tax amnesty of 2010 that erased GEL 36 million of liabilities from the books of Rustavi 2 and Imedi as major beneficiaries were the national TV channels. Trialeti TV and a few other media outlets had accumulated some minor tax obligations of less than GEL 10 thousand. A small part of the amnesty also benefitted TV stations critical of the government: Channel 25 was relieved of some GEL 277. 500, and Trialeti TV was forgiven some GEL 45 thousand. Kavkasia and Maestro meantime owe no taxes and enjoyed no amnesty, only pressure their owners assure.

“Nobody has never ever forgiven us any tax liability, we pay all taxes diligently and once had to pay even penalties when we passed the payment time,” Nino Jangirashvili, Director of Kavkasia, told Georgian Journal. She believes this alleged tax preference is a crime and infringement of free competition rather than encouraging fair market game as Khetaguri stated. Jangirashvili thinks the real target of the tax-preference initiative is an attempt of Saakashvili to amnesty Rustavi 2 and Imedi with total tax arrears of around GEL 19 million.

According to her, people sit in the prison for years due to GEL 5 worth past-due [tax] liabilities and mistakes in the GEL100 worth bill-of-lading while Rustavi 2 and Imedi have been exempted from millions of tax duties for years.

“I think it is a crime, it is an obvious deal. When you steal millions from the state budget is not it a crime?” Jangirahsvili said to Palitra TV. “Starting 2004 Rustavi 2 is actually exempted from taxes and accrues millions while nobody else is exempted, is not it a crime?”

Mamuka Glonti, a founder of Maestro TV, assesses the recent tax-preference as a robbery of taxpayers. He believes Saakashvili stands behinds the preference initiative.

“Saakashvili very likely owes money to Rustavi 2 and Imedi and cannot pay,” Glonti presumes.  Both Jangirashvili and Glonti demand cancelation of the said tax-preference decision and muse over an idea whether to file a lawsuit separately or call for other media too.

Ditrikh Muller, a co-founder and legal expert of Georgian Investment Group, also believes the last decision of Khetaguri is a crime and infringement of other taxpayers’ rights.

“It is an illegal act to give preferences to certain commercial entities at the market no matter whether or not it is media or any other business. All commercial organizations should be put in equal conditions. If they have losses and tax arrears it bespeaks of problems in their management and it is none of the state problem, let them improve management and pay taxes like all of us do,” Muller told GJ. “As to GPB, its arrears can be erased since the company is budgetary-based, but the issue of responsibility of GPB’s management should be raised since they cannot handle with the company properly.”

He believes Khetaguri’s decision is triple-illegal as it violates not only competition but the tax and budgetary laws.

“The tax legislation does not envisage reducing of tax-duties that is an outlaw. The Revenue Service (RS) had to arrest accounts of non-obedient tax-payers owing millions for years instead of giving preferences. RS violated the law too. Neither did the state budget foresee loss of tens of millions in taxes.  Besides, Khetaguri who actually stepped down from the post of minister as far as the ex-government is officially retired until approval of the new one, had no legal right to issue any official decision,” Muller said.

Rustavi 2 and Imedi make no comments.


Other Stories
The World Digital Mining Summit to be held in Georgia
The summit is scheduled to take place between 21st-23rd September in the Hualing Hotel, Tbilisi, Georgia.
Galt and Taggart - Tourism Boom Continues in Georgia
Tourism has become one of the key drivers for the Georgian economy. Galt and Taggart has recently published research about the Georgian tourism sector in the first half of 2018.
"The worst dream for Putin is that Russians want to live in Georgia"
This year, visitors to the Adjara region would notice that there is a boom in construction in and around Batumi.
Underground gas storage facility to be built in Georgia
KfW, a German government-owned development bank signed a EUR 150 million promotional loan with the state-owned Georgian Oil and Gas Corporation (GOGC) for the construction of the first underground gas storage facility in Georgia.
New gambling rules for Georgia
Georgian lawmakers are preparing a new draft law relating to online-casinos and gambling that will seek to curb gambling addiction in Georgia.
How expensive is it to visit Georgia?
The Georgian Lari (GEL) is the official currency of Georgia and is the only legal means of payment in the entire territory of Georgia.
Trade with the EU and the Commonwealth of Independent States (CIS) has grown significantly
Trade with the EU and the CIS has grown by 26% and 33.5 % respectively, says GeoStat, the Georgian National Statistics Office.
The unemployment rate decreases in Georgia
The unemployment rate decreased in Georgia by 1,9% and amounted to 12.1% in the 2nd quarter of 2018 compared with the previous quarter,
Memorandum of Understanding to be signed between Georgia and Malaysia
According to the Georgian Ambassador to Malaysia Nikoloz Apkhazava, Georgia plans to sign a Memorandum of Understanding (MoU) with Malaysia.
“Blauenstein Georgia” due to expand in Georgia
“Blauenstein Georgia” is planning to open more shops in Georgia. It is an agriculture company that sells meat products, meat and convenience food.
The amount of Direct Foreign Investment rises in Georgia
According to the information of the National Statistics Office of Georgia, the amount of direct foreign investment in Georgia has risen
It’s going to get  harder for foreigners to get residence permit in Georgia
It’s going to get harder for foreigners to get permit of residence in Georgia.
Mziuri Park in Tbilisi to be renovated soon
It was the dream of prominent Georgian writer Nodar Dumbadze that when the original Mziuri park was constructed and opened in 1892 that it should be a park for children,
Winemakers to produce Kvanchkara in its place of origin - Racha
Khvanchakara is a semi-sweet Georgian red wine which originates from Racha, in the western part of Georgia. Kvanchkara is made of two types of grape Mujuretuli and Aleksandrouli.
The level of Georgian wine and Chacha exported has increased
The National Wine Agency of Georgia has recently published statistical information about the level of Georgian wine and Chacha exported between January and July, 2018.
New fire engines to be Manufactured in Georgia
The Acting Head of the Emergency Management Agency Shalva Khutsishvili said that the old Zili fire engines (which were made in the USSR) will be phased out and replaced with new ones, manufactured in Georgia.
Georgia witnesses a record number of tourists
The Georgian National Tourism Administration publishes statistical information about international visits to Georgia.
Canadian businessman plans to build a hotel in Bakhmaro
Canadian businessman Vadim Malishev plans to build a hotel in Bakhmaro resort, Guria, in the western part of Georgia.
Coffee Factory will open in Tbilisi in October
The first coffee factory (which will be located on the Kakheti highway) in Tbilisi will open in October.
Places in Georgia where real estate is the most expensive
The real estate market in Georgia is growing annually. In Tbilisi as well as other regions of Georgia new developments are increasingly taking place.
How much does a vacation cost in Tbilisi?
It is the middle of summer and those who have not yet taken a vacation are looking for an appropriate place for sure!
The price for extreme sports in Georgia
Georgia offers a variety of options to extreme sport lovers.
The number of Georgians who own property abroad increases
The number of foreign properties owned by Georgians is increasing.
How much does Taxi cost in Tbilisi?
Stories how Taxi drivers try to deceive passengers and charge them with more money than they should pay are known for everybody all over the world.
What are the highest paid areas in Georgia
According to the data collected by the National Statistics Office of Georgia in the first quarter of 2018 the highest paid jobs in Georgia are found in the financial and insurance fields.
Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange