Tax secrecy and corruption
16 January, 2014
Tax secrecy and corruption
The bill on easier access to tax secrecy creates corruption risks for government and undermines fair market competition. It aims to make tax secrecy law more liberal, ostensibly. It empowers the tax administration - the Revenue Service of the Ministry of Finances (MOF) - to dispense tax secrets or commercial secrets to the Georgian government as well as the Ombudsman, law-enforcement bodies or any other necessary body without the consent of the court or the taxpayer, if the need for
this information satisfies legal mandates … but it has no right.
The bill was initiated by the Ministry of Internally Displaced Persons from the Occupied Territories, Accommodation and Refugees of Georgia (MIDPOTAR). Already submitted to the legislative body, it will be considered during the spring session.
Analysts and researchers call the change unprecedentedly shameful; investors will be scared off. Even Prime Minister Irakli Gharibashvili, who said he actually learned of it through media, cannot get a grip on the projected change.
The current law mandates only that the tax administration has direct access to tax secrets. However, it may make disclosures to MoF employees, the Dispute Council (which operates with the MoF),
law enforcement bodies, the court, statistical bodies, and the National Bureau of Execution and Control Chamber of Georgia - if they need the information to execute their duty. In any other cases tax secrets can be disclosed only with the consent of the taxpayer.
The Prime Minister believes that MoF can easily provide the due information to the structure that needs it. “Why should you dispense the information to a structure that does not need it?” He wondered at the governmental session on 10 January, and asked government for more coherent action when initiating a bill.
The Personal Data Protection Inspector also seems puzzled. She calls for Parliament to hone the projected mechanism of tax secrecy dispersion very carefully in order to guarantee protection of personal privacy. She recommends registering every information dispersal case, and informing taxpayers every time their information is disclosed.
Minister of Finances Nodar Khaduri nevertheless finds the scheduled change harmless and logical. He believes it streamlines the law as it puts all governmental structures in an equal position to get access to tax information.
But some economic analysts are indignant. “The bill is a mug’s game,” Ditrikh Muller, a co-founder of Georgian Investment Group+, said angrily. He believes that the broader the circle of governmental structures admitted to tax secrets, the higher the risks of corruption and leakage.
“Now if my commercial secret leaks out I know how to trace down the culprit: it can be either the tax organ or the regulatory body of my sector [which may also have access]. But if the circle is widened, and what is worse, access to my secret gets easier, bypassing the court and my consent, how am I ever supposed to find the misdeed?” Muller asked.
He believes this kind of change may muddle the market completely: businessmen will by all means try to bribe officials to disclose commercial secrets of their competitors. It will spoil fair market competition and will lead companies to dig up dirt on each other. And of course this kind of practice will scare reputable investors off. “This is a shame, no civilized country knows anything like that, tax and commercial secrecy is sacred and should be protected if we want any economic development,” Muller said indignantly.
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.
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