Upcoming independent dispute chamber
10 March, 2011
Upcoming independent dispute chamber

Soon  businessmen will be able to appeal to a new tax dispute council at the Business Ombudsman’s office. The project on creation of the additional tax dispute body is under vision at the moment and it’s supposed to be through in a month and a half tentatively.
Business people can appeal with their tax-related claims either to the court of justice or to two tax dispute councils functioning at the Revenue service of the Ministry of Finances (MOF) and at

MOF itself. However, private sector has no trust in any of them: tax dispute councils at Revenue service and MOF come to the clash of interests inasmuch as the Head of Revenue service and Minister of Finances head them respectively. And yet the MOF dispute council includes five MPs and business ombudsman himself private sector as well as economic analysts assures it cannot be impartial as far as the final decision goes with the finance minister who is hardly supposed to settle against state interests.
Governmental understanding was that offended business people could go to court for impartial verdict. But courts enjoy no better fame than the governmental dispute councils: it also settles for the state usually.
In 2005 after introduction of a new tax code [revoked this year as a new one entered into effect] government introduced an arbitrage but revoked soon after losing first cases.
This year government [been implementing a new business-oriented economic course] mused and decided to create number three dispute council with the independent Business Ombudsman’s office, that was separated from Prime Minister’s office and established as an independent body by end-February.
Nika Gilauri, Prime Minister of Georgia, trumpeted this initiative on March 1, 2011.
“Up today if a company questioned the imposed tax it might appeal to the dispute council at the Revenue service and then take the claim to the MOF dispute council. After discussion we decided to create an additional discussion forum and at Business Ombudsman’s office one more chamber of dispute will be added and the head of this chamber will be business ombudsman,” Gilauri stated.
According to him, representatives of MOF and private sector are also supposed to be included as members of this third dispute chamber, and this third instance will be supreme to the two others operating at MOF, and the last word will go to Business Ombudsman’ dispute chamber.
Governmental standpoint is that creation of a new dispute chamber must raise trust of investors toward Georgian tax code and boost economic activity of the country.
However the new dispute chamber project is under vision and details provided by premier may change after consultations are over. 
According to Zurab Melikishvili, Head of Finance and Budget Committee at Parliament, the single thing that can be said for sure today is that reorganization of dispute councils is planned after which a new structure will be established at the business ombudsman’s office.
Economic analysts approve the initiative if the new dispute chamber is really mandated to take independent decisions and not formally.
“Creation of a new dispute council has a sense only if its decisions will be obligatory to MOF and Revenue Service to implement and not on the level of recommendations,” Davit Narmania, Director Executive of the Center for Economic problems Research, told Georgian Journal.
Moreover he finds of paramount importance to include private sector’s representatives in the new council next to governmental officials.
Levan Kalandadze, Director Executive of Georgian Small and Medium Size Enterprises Association, does not rule out that the dispute council at the Revenue service will be revoked as far as it is an apparent interest conflict: Revenue Service imposes the disputed tax and it is scarcely possible that it would revoke its decision at its own dispute council later. On the other hand creation of a new dispute council bespeaks of bad management of Revenue Service.
“Creation of new dispute council will be justified if it also punishes the culprit tax officers who practice incorrect tax-collection. I have never heard of anyone who took even administrative punishment for wrongly calculated taxes, while businessman is jailed if he/she owns GEL 25 thousand of tax liabilities against the state. But if a tax-officer is responsible for similar ill-calculated tax he/she bears no punishment,” Kalandadze said.
However economic analysts believe the best way-out would be introduction of arbitrage again as it is practiced in all civilized countries.
Giorgi Pertaia, Business Ombudsman, says all details are under vision at the moment. He disagrees that arbitrage is the best way out to Georgia today for business culture is low and the arbitrage member-businessmen may face a serious temptation of corruption from their fellow-men.
“Arbitrage is supposed to be introduced gradually but only after the business culture develops in Georgia to due level, but it is risky today,” He told GJ. 
“Arbitrage and the fair court together can balance situation best of all,” Narmania said.

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