Georgian Business Pays for Transparent Taxation
22 December, 2011
Georgian Business Pays for Transparent Taxation

To ensure fair and transparent taxation Georgian business has to pay for services that Revenue Service is obliged to provide free of charge. 

Georgian Revenue Service (RS) in quest of effective ways to increase law-obedience in Georgian business and make taxation transparent, introduced payable tools and services this year that ease tax administration but increase cost burden.

On the one hand RS delegated its authority on reputable audit companies that can implement alternative audit of a business instead of RS. The key

lure of the alternative audit is that unlike RS audit it exempts business from fines and will be paying only key liabilities. Moreover, RS cannot audit the company again in the period inspected and approved by private audit. High risk group business cannot enjoy this service but those in middle and low risk groups have a choice: either to be audited by RS officers and pay full liabilities plus penalties or hire expensive private audit company but be exempted from penalties as well as make paper-work streamlined that ease things in future.

But alternative audit average cost stands at GEL 10-30 thousand and goes higher while it does not exempt from fines fixed on overdue liabilities that are much more important to reach million sometime while penalties that stand at approximately GEL 300 are less significant in fact.

To increase transparency and trust RS also adopted payable private tax agent service for GEL 2 thousand in six months [approximately GEL 333 per month] that enables business to hire RS officer as long as it would like to handle with tax-related paper-work and problematic issues thus insuring smooth operation of business. Moreover, RS enables taxpayers to inquire of some questionable taxation cases at RS before audit and RS will give them a preliminary notice, kind of an instruction paper explaining how to tax the questionable point that will have a legal mandate but that costs at least GEL 5 thousand. If a company wants to get such a preliminary notice in ten days they have to pay GEL 10-15 thousand based on the annual turnover.

RS standpoint is that introduction of payable alternative tools [specifically alternative audit] enabling business to streamline their paper-work will give impetus to legalize business and build trust toward tax service and state.

International statistics show that 97-98% of taxes are collected through voluntary compliance and only 2-3% through audit activities. But voluntary compliance is based on trust that can be gained if tax service acts within the law through professional and responsive staff not through introducing payable service that must be free of charge by essence.

Davit Narmania, Director Executive of Caucasian Institute for Economic and Social Research, doubts that alternative audit as well as other payable services focused on transparent taxation can build trust toward RS. He thinks that audit is the state function and the job of RS that is paid for this from the state budget and business should not pay for services that must be free of charge.

Lily Begiashvili, Deputy Head of Revenue Service of Georgia, acknowledges that many developed countries do not like delegating audit rights from the state to private companies but Georgian RS believes this model is apt to Georgian reality [where business prefers to have an affair with business rather than tax service] and alternative audit is expected to remove feeling of discrimination and unfair treatment in business since private auditor will be checking papers instead of RS that will increase transparency of taxation process and build trust toward the state tax administration and state itself.

“Many countries do not agree with this model but let’s assume it will be very beneficial to Georgian society and our reality as it will strengthen mutual trust and cooperation,” Begiashvili said on December 14, 2011 during meeting with media organized by the USAID supported Economic Prosperity Initiative.

Narmania presumes that introduction of new payable tools is related with lack of RS own resources to cover all audits rather than with the care for trust-building between taxpayers and tax service. He regrets state money is spent on doubtful reforming tools that may not justify expectations and recommends diverting those resources on improving RS service skills.

“It seems less persuasive that trust toward tax service will increase through alternative audit or any other payable services introduced by RS lately. Yes, they ease tax administration but increase costs to business as far as they should be paid, besides if there were trust toward tax service they would not need any alternative audit,” He told Georgian Journal.

Levan Kalandzde, an economic analyst, thinks payable services are discriminating.

“Yes, alternative audit for example is a choice to business that infringes tax law and expects penalties of RS, price for private audit may offset its liabilities, but honest business that has nothing to hide has to hire private audit to insure transparent taxation [for it does not trust RS] that is discriminating: they pay off fair taxation in fact,” he said.

Print
Other Stories
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.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Bitcoin.com Head Speaker List featuring Circle, DEX.top and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23
GAZELLE FINANCE GEORGIA AND TBC BANK HELP THE WESTERN REGIONAL CENTER OF MODERN MEDICAL TECHNOLOGIES EXPAND ACCESS TO QUALITY HEALTHCARE SERVICES IN KUTAISI, GEORGIA
TBC Bank and Gazelle Finance have teamed-up to support Medical City, a leading healthcare provider in the western region of Georgia to launch the Western Regional Center Of Modern Medical Technologies.
Equivalent to buried treasure – resources that are underused in Georgia
For 2018 the IMF Commission has forecast an annual economic growth for the Georgian economy of about 5,5%.
Does the quality of Georgian wine increase and how the export affects it
If we look at the data collected about modern Georgian wine, we will find out that the Georgian wines produced between 2015-2017 are much better in terms of their quality and Oenologic features rather than the wines produced between 2009-2011.
Japan simplifies the visa requirements for Georgian citizens
Diplomatic and economic relations between Georgia and Japan are now moving to a new phase. Recently Japan has decided to simplify the visa requirements for Georgian citizens.
M&S (Marks and Spencer) and H&M collections to be produced in Georgia
Garments manufacturer MGMTEX will start production of the M&S and H&M trendy collections from this September.
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.
PHOTO OF THE DAY
Exchange Rates
GEL Exchange Rate
Convertor
12.11.2018
13.11.2018
USD
1
USD
2.7146
2.7166
EUR
1
EUR
3.0800
3.0602
GBP
1
GBP
3.5325
3.4900
RUB
100
RUB
4.0430
4.0131
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
2.7166
EUR
1
EUR
3.0602
GBP
1
GBP
3.4900
RUB
100
RUB
4.0131
November 2018
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