Amendments to Georgia’s Tax Code

TBILISI - The Georgian Parliament adopted amendments to the country’s corporate income tax reform that will come into force in January 2017.

The new corporate income tax (at a regular rate of 15 per cent) will only apply to distributed profit. Undistributed profits that have been reinvested or retained will not be subject to income taxation. 

The new system will also affect all commercial banks, credit unions, insurance companies, microfinance institutions and pawnshops from 2019.

According to preliminary government estimates, the state budget will receive about 600 million GEL less in corporate tax revenues in 2017 as a result of the tax reform. A further drop of 300,000 to 400,000 GEL is expected in 2018.

The government, however, says it will be full compensation for the losses as a result of economic growth in the following years.

According to the new bill, the fiscal tax period will be one month long instead of the current one calendar year.

The parliament also adopted other amendments to the tax code, including a provision that states the Finance Ministry’s Internal Revenue Service will remain the sole authorized body tasked with carrying out tax audits.

The current legislation allows the relevant authorities to order a freeze of all bank accounts of business involved in a tax dispute. Under the new law, a court must authorize the freeze of bank accounts within 48 hours.

If the court fails to consider the request in the allotted time, the account will be released.

By Eka Karsaulidze
Edited by Nicholas Waller

16 May 2016 16:09