Narrow door of Georgian micro and small business paradise
24 February, 2011
Narrow door of Georgian micro and small business paradise

Georgian government started delivery of certificates for micro and small business status to make available the taxation preferences introduced by the new tax code. But apparently 80% of eligible candidates remain out of the coverage area of privileged.
The new tax code that entered into effect starting January of this year introduces simpler taxation regulations for micro and small business.
Any physical entity [or individual entrepreneur] who does not use employees’ labor and whose annual turnover does not exceed GEL

30 thousand is exempted from taxes. Business is small if annual turnover of individual entrepreneur stands under GEL 100 thousand. Small business is exempted from the Value Added Tax (VAT) and can choose taxation terms: if it presents financial paper proving that either 5% of the business annual turnover or 60% of its total incomes go on financial expenses their income will be taxed by 3%. Otherwise it will be taxed by 5%.
According to Giorgi Tskhakaia, Head of Revenue Service, the financial documentation in question  does not require hiring of an accountant or any extra expenses. Entrepreneurs can handle with it pretty well and be taxed by just 3%.
To enjoy the preferences eligible candidates are required to submit due applications at the revenue service for granting certificates either on micro or small business status. About 3444 applications are already registered at the revenue service and 2500 out of them requires micro business status. 
Revenue Service of the Ministry of Finances of Georgia has already undertaken delivery of certification starting February 18, 2011.
What makes business people as well as economic analysts worry is that the list of eligible beneficiaries of the much trumpeted taxation preferences is cut down next to nothing. The fact that only physical entities can enjoy the proposed privileges leaves legal entities like small beauty salons and bakeries [with annual turnover under GEL 30 thousand] that make bigger part of small and medium sector in uncompetitive condition. They will be taxed similarly to big enterprises with annual turnover exceeding several millions. This is discriminating and discourages business, economic analysts say. Government does not elaborate the problem. 
According to Levan Kalandadze, Executive Director of Georgian Small and Medium Business Association, the reason is that the bigger part of Georgian enterprises is made by small Ltd companies actually and if government makes taxation privileges available to them tax administration of about 80% of business will become simpler. It means that taxation crackdown on business laying ground to fulfillment of the revenue-based budgetary incomes will be difficult.
“It is not handy to government at the moment,” he said.
But this is a part of the problem. Another confusing thing is that individual entrepreneurs who were supposed to benefit out of taxation privileges can scarcely enjoy them. The list of eligibility criteria for micro business status states that the status of micro business cannot be granted to individual entrepreneurs if they perform a service in a sector that requires licenses and permits, implement currency exchange operations, are involved in medical, architectural, advocacy and notary, audit, consultancy [including tax consultancy] service or  gambling business. Moreover the micro business status door is closed to trade people, people involved in communal activity like repair of the consumer equipment/technical appliances, hairdressing and other related activities.  
“I really cannot understand who [if anybody ever] is the target group for the proposed micro business status. The list of eligible candidates is reduced to minimum.  Individual entrepreneurs were made by petty traders in fact, hairdressers, and people involved in communal activity sector but they are refused,” Nodar Khaduri, economic analyst, says. 
He fears that the tighter inflation pressure this year may aggravate the puzzle  who can sneak through the narrow passage of Georgian micro and small business paradise.
“Nobody provides with an explanation whether or not the 12% inflation pressure will be taken into account during estimation of annual turnover of business to grant either micro or small business status to it. The problem is that if  annual turnover equaled GEL 30 thousand and GEL 100 thousand past year now this figure is  increased to GEL 33 thousand and GEL 112 thousand respectively due to inflation, and what such businesses are supposed to do? Can they apply for micro/small business status or not? This is a really huge question,” Khaduri told Georgian Journal.

Print
Other Stories
Who is constructing “Khadori 3” Hydropower Plant in Pankisi Gorge?
Clashes broke out in Pankisi Gorge, Georgia’s northeastern region between special forces and residents
Business Positive – Successful radio program from Radio Positive
Starting point of radio program Business Positive is to meet interesting people, communicate with them and deliver information that is interesting for the audience.
A factory of electric vehicles to be built in Kutaisi
Prime Minister Mamuka Bakhtadze stated that a factory of electric vehicles will be built in Kutaisi at the presentation of the Aigroup business group.
Qvevri-shaped hotel complex to be built in Telavi
A Qvevri-shaped hotel complex is scheduled to be built in the village of Shalauri in Telavi, Kakheti (east part of Georgia).
Georgian designers presented at Fashion World Tokyo 2019
The products of 11 Georgian designers are showcased at Fashion World Tokyo 2019,
Silknet raises $200 million in Eurobond issue
27 March 2019 - JSC Silknet (“Silknet”), one of Georgia’s leading telecommunications operators, has successfully priced a debut $200 million 5-year 11% senior unsecured bonds issue (the “Notes”).
Pistachio trees will be planted in Georgia
Dozens of hectares of Pistachio are planned to be planted in Georgia this year.
Toyota Safety Sense and Hybrid Technology
Toyota Caucasus, has presented two new models the 5th generation RAV4 and the 12th generation Corolla at Rustavi International Motorpark, several days ago.
Bidzina Ivanishvili “became number one oppressor of businesses in Georgia” - ICC Georgia chairman Fady Asly
Mr. Ivanishvili promised the business community to protect them from harassment and pressure, unfortunately his words died with the sunset of that day
The best brands of Belarus will be exhibited on a large-scale exposition in Tbilisi
"The Belarusians like to come to Georgia to relax near the sea in Batumi as well as to stay in sunny Kakhetia."
Don’t treat business like a hooker! - Georgian businessman Vasil Soprpmadze addresses politicians
Businessman Vasil Sopromadze, founder of the company "Fresco", addresses politicians
RAV4 No Compromise and Corolla Set to Impress – Two New Cars Presented by Toyota
Toyota Caucasus, the company constantly aspiring to greatness, has presented two new models the 5th generation RAV4 and the 12th generation Corolla.
Mamuka Khazaradze quits TBC bank, does not sell the TBC Bank share
I made a decision to leave TBC bank where I spent 27 years of my life
10 Reasons to buy an apartment in the suburbs
There is a tendency for Tbilisi dwellers to move from central parts of the capital to the suburbs.
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.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
21.04.2019
22.04.2019
USD
1
USD
2.6935
2.6935
EUR
1
EUR
3.0291
3.0291
GBP
1
GBP
3.5021
3.5021
RUB
100
RUB
4.2126
4.2126
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
2.6935
EUR
1
EUR
3.0291
GBP
1
GBP
3.5021
RUB
100
RUB
4.2126
April 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
29 30