New economic course - reminder of old blemishes
16 December, 2010
New economic course - reminder of old blemishes

Georgian government acknowledges defects in communication policy of government with the private sector and pledges to become a partner to business henceforth.
Much trumpeted “new economic course” of Georgian government aimed at creation of fair, simple and trustful taxation system looks to business like a guilt confession rather than a new strategy. 
On December 3, 2010 during the opening ceremony of a new Customs Clearance Zone (CCZ) in Lilo, outskirts of Tbilisi, Mikheil Saakashvili, President of Georgia, acknowledged that Georgian

business has been suffering of unfair treatment on the part of tax administration [who frequently misused its power] and pledged that government undertakes a new business-oriented economic course insuring business-friendly environment to private sector from this time forth.
Three key components including new tax code, state-of-the-art infrastructure of CCZ [introducing one-step-window supposed to be deployed across the country  so as to spare importers of week-long demurrages at customs terminals by minimizing customs-clearance related expenses and timelines], and retrained personnel of taxation body is supposed to ease life  to business.
Georgia, put among top-leaders of Ease of Doing Business rating of World Bank for the last 3-4 years [thanks to liberal economic reforms undertaken by government] is of notorious fame among investors by a tax-administration crack-down on business. Transparency International Georgia (TI Georgia), a non-governmental watchdog, having researched Georgian taxation system this spring came to conclusion that Georgian taxation system is one of the key perils creating setbacks to economic development of the country once the imperfections of the existing tax system lay ground to tax terror and scared investors off.
Georgian business together with economic analysts have been hailing government for years that not the tax rates are the problem but the administration of taxes, that the currently active tax code is hardly understandable, includes dubious paragraphs leading to double interpretation and crack-down on business , but to no avail. Their voice was like the voice in the wilderness as Government strongly believed that the tax administration was smooth and fine. The ice melted this summer when Georgian authority acknowledged at last the tax code problems and rewrote it into a new one. The new code [that enters into effect next year] introduces an institute of business Ombudsman to protect  private sector  from the state crack-down although still ignores the key demand of private sector – presumption of innocence of business [built in all possible tax codes globe over]. It means that tax administration still is empowered to accuse business based on bare presumptions and business has to prove its innocence. Moreover, penalty rates increased, the taxation base got enhanced, and double-interpretation problem remained.
In October Revenue Service staged a real witch-haunt on petty traders, arrested hundreds of trades-people at Bazroba under pretext of tax-felony and imposed unreasonable penalties. Economic analysts argued that the inadequate punishment policy undertaken by revenue service might kill out petty business completely.
Now out of sudden government trumpeted the launch of “new economic course” that must settle all business-problems in 4-5 months after the new tax code enters into effect starting January of 2011 as Kakha Baindurashvili, Minister of Finances, said while advertising the new course through the whole  past week.
On December 13, 2010, Baindurashvili introduced the new course to MPs behind closed doors, and once more reiterated that the upcoming tax code insures establishment of partnership between the business and tax bodies. He underlined that the new code distinguishes so called “honest principle” that forgives an inadvertent tax-felony to innocent infringers. Moreover entrepreneurs paying at least GEL 200 thousand of Value Add Tax (VAT) in the state budget are exempted from VAT on import. Moreover tax-payers are empowered to ask tax-officers to implement a taxation check in the period most convenient to businessmen.
Economic analysts say the new economic course is nothing new in fact but a reminder of old problems. Davit Narmania, Executive Director of the Institute of Caucasus Economic and Social Research, thinks the recent much-ado is a PR campaign rather than a breakthrough in governmental mentality.
“I have no idea why do they need this PR campaign now but there is definitely nothing new in this economic course, government just acknowledges the tax administration problem we have been hailing for the last 3-4 years and that government has been refuting so obstinately,” He said.
“Where’s the novelty?” Levan Kalandadze, Director Executive of Georgian Association of Small and Medium Business, asked Georgian journal. “We have been accentuating on the tax administration problems starting the day old tax code was entered into effect but government persistently used to deny it. Government lacked due communication with business because it talked only with big business ignoring SME sector meantime. As per newly re-equipped CCZ government is obliged to develop a modern customs clearance zone infrastructure after all. The single new thing is authority confessed its mistakes and acknowledged that tax administration must be simpler and milder, that makes me hopeful that maybe things really can get better array.”

Print
Other Stories
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
18.02.2019
19.02.2019
USD
1
USD
2.6413
2.6404
EUR
1
EUR
2.9791
2.9908
GBP
1
GBP
3.3851
3.4130
RUB
100
RUB
3.9608
3.9898
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
USD
1
USD
2.6404
EUR
1
EUR
2.9908
GBP
1
GBP
3.4130
RUB
100
RUB
3.9898
February 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28