Revenue service encourages transit
12 May, 2011
Revenue service encourages transit

Double interpretation of tax code that scares maritime and freight shipping companies off Georgia seems to be solved.

The transit image of the country is saved, freight forwarding companies say. 
The upcoming exemption of maritime transport and related service as well as empty containers transportation from the Value Added Tax (VAT) makes hopeful the m

aritime and freight shipping companies that Georgian government is really interested to encourage transit through Georgia.

 

The transit image of Georgia somewhat shattered early this year by practicing a so called Zebra policy [rhetoric dispute whether zebra is white with black stripes, or it is black with white stripes] affecting international maritime and freight shipping companies operating in Georgia through double-interpretation of Georgian tax code seems to be restored soon.
The year started by litigation processes against the state sued by several freight forwarding companies for unfairly imposed penalties the Revenue Service imposed on them for alleged six-year VAT-elusion. The Revenue Service argued that freight shipping companies have been eluding VAT on service provided to empty [railway] containers on their way back after delivering the cargo at the place of destination.
Companies along with legal experts assured the empty-container transportation has always been exempted from VAT based on international freight shipping convention that charges by VAT the entire service chain of cargo transportation from its start point to the place of its destination and this service chain includes transportation of empty containers on their way-back. Georgian tax administration also acquiesced and observed this agreement for many years although this exemption was not built in the old tax law through a clearly stipulated paragraph leading to double interpretation and government took an advantage out of it finally. In January of 2011 the Revenue Service accused freight shipping companies in VAT elusion and imposed huge penalties accruing to several millions. 
As Bondo Bolkvadze, customs legal expert, explained to Georgian Journal, charging empty containers by VAT was not in line with the international practice, it pegged prices up, and all these was affecting Georgian transit image. He advised Georgian government to put Georgian legislation in compliance with the international one.
On the other hand, under the pretext of security and safety, Revenue Service imposed a monopoly on customs clearance of motor cars and starting January of 2011 forced international maritime companies to implement customs clearance of car-cargos only through the state-owned Customs Clearance Zone in Poti Port. Maritime companies [40% cargos of which are made up by cars] having implemented customs clearance through their contracted terminals for up to 20 years claimed it affected their established prices and increased costs by 60%. On the other hand they reported on outrageous crack-down on business to the EU structures and some even made up mind to quit Georgia.
However, political will of Georgian government changed at last and after dismissing strong-handed Girogi Tskhakaia in this past March, former head of Revenue Service, and assigning liberally-disposed Jaba Ebanoidze at the post, things changed in a right direction. 
Crack-down on maritime companies stopped and they go ahead with their usual practice of cars customs clearance. Moreover, in this past fortnight the Revenue Service made changes to the tax code clearly stipulating that the empty containers-related service like loading, unloading and storage  are exempted from VAT. The currently active tax code exempts from VAT only services related to transportation of empty transporting means [containers and wagons] beyond Georgian borders and their way-back.
Another concession made by government to maritime business is exemption of  the ship-container-related service at ports from double VAT charge. The point is that according to the active law, services performed to ships at ports were taxed twice: when a ship purchased a service for cargo during entering the port it was charged by 18% of VAT but could not register it for it was ranked as non-VAT payer by law. On the other hand the service performed by ships including the already paid VAT was included in the tariffs of goods and the service faced double VAT taxation.
According to Zurab Shengelia, Chairman of Association of Georgian Freight Forwarding Companies, the concerted cooperation of business with business ombudsman and revenue service led to positive results.
“Double-interpretation creating a lot of problems is removed and all VAT exemption details are clearly elaborated and written in the tax code. I think that business ombudsman institute creation of which was under suspicion  initially justifies itself,” he told Georgian Journal.




 

Print
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.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
23.09.2018
24.09.2018
USD
1
USD
2.6216
2.6216
EUR
1
EUR
3.0854
3.0854
GBP
1
GBP
3.4584
3.4584
RUB
100
RUB
3.9340
3.9340
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
2.6216
EUR
1
EUR
3.0854
GBP
1
GBP
3.4584
RUB
100
RUB
3.9340