Fixed Tax Will Cover More Business Gradually
08 March, 2012

 

Fixed tax rate exempting business from bookkeeping and Value Added Tax will cover more businesses gradually by the end of this year as the list of targeted businesses will be clarified.   Fixed tax is already defined for Georgian traditional bread bakery ovens called Tone [a round-shaped clay oven heated by wood] and beauty salons but which other business can enjoy the fixed rate is still under vision and supposed to be cleared gradually, Dika Chubinidze, Head of Legal Department at

Revenue Service of Georgia (RS) said.

What is known for today is that fixed tax will be an alternative taxation form to small entrepreneurs who may choose between ordinary taxation and preferential fixed tax that creates an opportunity to exempt business from bookkeeping, profit tax and Value Added Tax (VAT). It will work through two models but both cover only businesses that perform service to individuals alone and not corporation.

One model will cover service businesses [like bakeries, repair workshops and beauty salons] and its representatives will pay fixed rates monthly or quarterly and be exempted from cash-registers and bookkeeping obligations alike. RS has already charged each Tone-oven by GEL 100 per month. GEL 100-50 is defined tentatively per hair-dresser chair at beauty salons. Charges for a salon chair in the center makes GEL 70 and GEL 50 in the outskirts.  GEL 50 and GEL 30 very likely will be fixed for each pedicure specialist in the center and outskirts respectively.

Entrepreneurs who will opt for fixed tax and become exempted from the recently introduced electronic GPRS cash registers costing about GEL 290 apiece can return the cash-machines to the RS and get its cost back. RS will calculate their exploitation period and deduct it from the cost. RS obliged businesses to supplant old cash-registers by the state-of-the-art GPRS machines reporting payment information to the RS immediately on-line by the end of 2011. This requirement caused much ado for the cost for new machines was quite expensive and experts believed state had to pay for it. Ultimately state paid for part of petty businesses and the remainder covered costs themselves. Interest-free payments in installments were also available. And thus complicatedly acquired machines are supposed to return in a month. The return procedures look quite confusing too.

As to another fixed rate model charging trade sector entrepreneurs by 3% of annual turnover, it is still under vision, Chubinidze said. Trade businesses that will be taxed by 3% of their turnover are not exempted from cash-registers for based on registered payments the 3% of turnover should be outlined.

The reason government decided to offer fixed tax is that preferences given to micro business early in 2011triggered business splitting. Micro business with turnover under GEL 30 thousand became  exempted from cash registers and all taxes except income tax. So beauty salons for example that generally used to be LTd split into chairs: each hear-dresser registered themselves as a micro business and pay only income taxes while the owner of the saloon enjoys usual income without paying taxes.  This deprived business of motivation to improve service and expand.  Now government expects of the fixed tax to give an incentive to businesses get bigger.

Economic analysts do not share this expectation.

“At any rate it requires very diligent calculation where business can gain and where lose. For example whether or not it is worth to be taxed by 3% of annual turnover or be charged per chair by GEL 50 rather than pay 15% of profit,” Davit Narmania, Director Executive of Caucasian Institute for Economic and Social Research, said. He thinks entrepreneurs will not harry on fixed tax for the information on its amenities is very scanty and not clear.

Irakli Lekvinadze, an economic analyst, finds the first fixed tax model discriminating.

“That’s not fair,” He said. “You charge by GEL 100 two ovens while both have different turnover. It a priori means that the one with smaller turnover will be discriminated.  The percent-based fixed tax seems better but requires very precise calculation. Those with big turnover most probably will not choose it, businesses with smaller turnover may prefer such taxation but it needs in-depth claulaiton.”

 

Print
Other Stories
The most wanted fruits from Georgia
The fruit exportation has decreased in Georgia. According to Geostat (National Statistics Office of Georgia), this year, up until May Georgia exported 25 939 300 USD worth of fruit – 6 771 300 USD less than in 2018.
Investment Plan for Europe – Additional EUR 800 million for SMEs as EIF and ProCredit double support for innovative companies
The European Investment Fund (EIF) and ProCredit Group are providing an additional EUR 800 million to innovative small and medium-sized companies (SMEs),
Everything of comfortable life in one space – Second part of construction of one of the largest apartment complexes finished in Tbilisi
Apartment in ecologically clean environment, thousands of square meters of green yard, swimming pools, places for various sports activities, treks for walking and running, commercial spaces – all these available in one space is not a fantasy.
Batumi awarded Europe's Leading Emerging Tourism Destination 2019
World Travel Awards Europe Gala Ceremony 2019 took place on the 8th of June in Madeira, Portugal.
Coca Cola to open new factory in Georgia, will hire female drivers
Coca Cola is opening new factory in Georgia in December.
World's best party supply company now on the Georgian market
The largest party supply store in Georgia - MyDay is launching as the official distributor of AMSCAN from 2019.
Live as a marketing tool and an unprecedented live stream launched by Livetag
Sharing information has become smoother and more versatile in today’s technological world. Recently, live streaming, an online streaming media has become especially popular.
Theme and program of Caspian Energy Forum Tbilisi – 2019 changed
“The 8th International Caspian Energy Forum Tbilisi – 2019, scheduled for June 21, will focus on the development of the Azerbaijan-Georgia relations in the field of economy and energy”,
Misunderstanding over Poti deep sea ports
There was misunderstanding around deep sea ports in Georgia – in Poti.
High demand for dollars or the investment decline – Why Georgian Lari depreciates
$1 equals GEL 2,7470 in the official rate set by the National Bank of Georgia (NBG).
PSP Group confirms negotiations regarding purchasing of GEO Hospitals
PSP Group confirms negotiations regarding purchasing of GEO Hospitals.
New life to be given to Dashbashi Canyon
Georgia’s Agency of Protected Areas is planning to give new life to Dashbashi Canyon in Tsalka (southeastern Georgia).
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
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
21.07.2019
22.07.2019
USD
1
USD
2.8845
2.8845
EUR
1
EUR
3.2410
3.2410
GBP
1
GBP
3.6177
3.6177
RUB
100
RUB
4.5787
4.5787
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
2.8845
EUR
1
EUR
3.2410
GBP
1
GBP
3.6177
RUB
100
RUB
4.5787
July 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 31