Georgia 9th on the List of Countries with the Lowest Taxes

Prime Minister of Georgia, Giorgi Kvirikashvili, during his recent public lecture at Humboldt University stated that the country ranked ninth place among the countries with the lowest taxes in the world. The Prime Minister has repeatedly made similar statements during other official meetings and public appearances. The research done by FactCheck project evaluated Kvirikashvili’s statement as mostly true.

The World Economic Forum assesses the tax burden of countries through its Global Competitiveness Study. The competitiveness of a country is evaluated based upon 130 indicators, one of which is the ratio of tax burden to profit. “According to the 2015-2016 Global Competitiveness Report, Georgia held the ninth place (with 16.4 percent) among the 140 countries included in the study according to the ratio of tax burden to profit. Similar reports of 2013-2014 and 2014-2015 indicated Georgia’s ratios of 16.5 percent and 16.4 percent, respectively, where the country occupied the tenth position,” stated FactCheck.

The World Bank also published data of the ratio of tax burden to profit, where Georgia occupies 13th place. The difference in the ratings was due to the fact that the Global Competitiveness Study includes 140 countries whilst the World Bank published its data for 220 territorial entities. Therefore, the positions of Georgia in the ratings are more accurately depicted by the data of the World Bank.

PM Kvirikashvili also presented Georgia as an Ease of Doing Business country, though in the corresponding study by the World Bank, Georgia’s ratings for 2016 do not show an improvement, with the country remaining in the 40th position as in 2015.

However, according to the Tax Misery & Reform Index published by Forbes in 2009, which is a summary of the percentages of marginal taxes in a country, Georgia held fourth place after Qatar, the United Arab Emirates and Hong Kong. FactCheck claimed that the most important change since 2009 will be the new rules for collecting corporate tax which will be enacted on 1 January 2017, thereby making profit reinvested in business entirely tax-free.

“This reform will positively influence Georgia’s positions in the aforementioned ratings,” it noted.

FactCheck is an innovative political news-and-information project established by Georgia’s Reforms Associates (GRASS). Modelled on established successful international political news-and-information watchdog services, such as PolitiFact.Com and FactCheck.org, it aims to rate the factual accuracy of statements made by Members of Parliament, the Prime Minister, the President and the Government economic team.

Eka Karsaulidze