Gov't Abolishes Benefits for "Golden List" Importers

Georgia’s Finance Ministry has abolished benefits for 217 so called “Golden List” member companies, putting them in the same category as small and medium businesses.

The 217 companies were allowed to pay import tax 30 days after importing goods; however, under the new law, this period has been reduced to five days.

Deputy Minister of Finance Tsotne Kavlashvili said the government policy, including tax and structural reforms, has been developed to improve the business environment in the country, which means the creation of equal conditions for all business entities.

"We have undertaken obligations to ensure that our customs procedures and regulations are harmonized with the EU customs legislation and this decision is another step forward in this direction,” he explained.

“These business entities have a reasonable time to adapt to the new regulations. Importers of non-excise goods have been given 30 days, and importers of excisable goods 10 days,” he added.

However, according to the Revenue Service, wheat importers on the "Golden List" will enjoy the previous conditions: 45 days to pay import tax.

The order issued by the Minister of Finance Ivane Matchavariani on May 31, which abolishes benefits for 217 members of the "Golden List," came as a surprise to the business community.

The above-mentioned amendment will take effect on the 10th day following publication of the decree for excisable goods, on 12 June 2019, and in other cases on the 30th following publication, on 2 July 2019.

A company gets the status of "Golden List" member if it shows up to GEL 5 million value goods in export or import or if the company shows a high rate of import duties paid, no less than GEL 900,000. In addition to this, the company must have a high amount of customs declarations submitted for the import or export of goods- no less than 100.

Some of the most prominent members of the “Golden List” are: JSC GEFA (GPC); JSC Teliani Valley, Tegeta Motors Ltd, Vioni Georgia LTD (Beeline); JSC Sarajishvili; Rompetrol, Magticom, LLC Elizi Group, Wissol, Lukoil, , Aversi-Pharma Ltd, Caucasus Online, Elite Electronics, LC Waikiki, New Hospital, SOCAR and Energo Pro-Georgia.

Mikheil Chelidze, Head of the SMEs Association, has three reasons, based on the information provided by the Ministry of Finance, which explain why the minister abolished simplified procedures for “Golden List” companies.

“First, we are going to Euro regulation, where there are no such benefits and the same regulations for everyone…Second: all importers should be in in equal conditions. I agree with this one…Third is the return of VAT. In this part, the Revenue Service saw some risks. This was one of the motivators that led to the conditions being made equal for everyone,” he explained.

Chelidze claims the Ministry of Finance is going to abolish the "Golden List" entirely in 2021.

The Georgian Business Association has released a statement on the cancellation of tax benefits for the 217 companies, saying it will lead to them having financial problems.

“This decision is to create serious financial problems for large importers. The Georgian Business Association believes that the decision should be postponed and additional consultations held,” the Association said.

Chairman of the Committee on Sector Economy and Economic Policy of Parliament, Roman Kakulia, says that there should be no "Golden List" at all, although he did comment on the reasons for the decision and noted a lack of proper communication.

"The emphasis was on the European regulations, European practice, and I agree with that. Now the dates have been moved ahead and not the content itself. I do not agree with the dates given to businesses but I agree with the content of the regulation. The “Golden list” should not exist and there should be the same approach for every type of company, but the adaptation period is very important for everyone,” he said.

Levan Gogsadze, the Head of the GT Group, which is on the “Golden List,” says that they did not receive any notification about the abolition of the benefits for large companies.

Gogsadze claims the government’s step is “ungrounded” and that it will have a negative impact on the “Golden List” companies.

“I learned about the changes from media. No one sent us any notification about the new regulations… I find it very strange that the issuance of such a regulation took place in a closed-door situation,” he said.

Business Ombudsman Irakli Lekvinadze says the existence of the "Golden List" is a good motivator for many companies, showing they are more reputable and enjoy benefits from being so.

“The main concern here is that the changes happened very quickly and without communication, which is very important for business when such a decision is made,” he said.

By Thea Morrison

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