CHANGES TO THE TAX CODE: AN OVERVIEW BY DELOITTE

Investor.ge is publishing Deloitte’s newsletter on changes to tax administration as a reference and resource for readers.

Double Tax Treaties
 The Parliament of Georgia has ratified (Resolutions # 3158 and #3157) the treaties on the avoidance of double taxation of income and capital gains and the prevention of tax evasion with Egypt and Israel.  The effective dates of the ratified treaties will be known once the Ministries of Foreign Affairs of the countries exchange the notes.

E-Tax Filing Amendment
With effect from June 2010, the Minister of Finance of Georgia issued Order #439 approving amendments to the Instructions “On the Electronic Tax Filing”.  As a result of the changes, taxpayers are entitled to carry out an electronic correspondence/filing with the tax authorities for the purpose of filling tax returns, obtaining VAT invoices, issuing excise stamps, submitting appeal applications, and in other circumstances, as allowed by the legislation. Both electronic tax returns and their hard copies are of equal legal force.

Instructions on Various Articles of the Tax Code
On June 17, 2010, the Minister of Finance of Georgia signed Order # 489 approving amendments and supplements to the instructions on application of various articles of the Tax Code of Georgia. The instructions exemplify the deductibility of bad debts, repair and maintenance expenses and expenses incurred by taxpayers in connection with preparatory works required for geological surveys and extraction of natural resources.

Instructions on Inventory Count
On June 15, 2010, the Minister of Finance of Georgia signed Order #481 introducing amendments to the instructions “On the Rules of Taxpayers’ Stock Taking”. The changes further clarify the requisites that should be included in the primary accounting documents, as well as the period and rules applicable to inventory counts conducted by the tax authorities.

Instructions on Tax Collection Measures
In Order #501, the Minister of Finance of Georgia circulated amendments to the Instruction “On Suspension of Executive Measures for Settling Tax Liabilities”.
Besides the wording clarifications, the Order introduces a form of an agreement on suspension of tax liability fulfillment procedures which should be signed between the Revenue Service and a taxpayer before suspending payment of tax liabilities. The taxpayer is required to pay its tax liabilities in accordance with the schedule attached to the agreement.

Instructions on Taxation of Payments Made by Diplomatic Organizations to Citizens of Georgia
With effect from July 2010, the Minister of Finance of Georgia enacted Order #529 introducing changes to the Instructions “On Taxation of Payments Made by International Organizations with Diplomatic Status to Citizens of Georgia”.
The amendments to the instructions define the responsibilities of the organizations with diplomatic status as regards withholding and transferring to the State Budget personal income tax levied on Georgian citizens employed by them.  The organizations may assume the role of a tax agent on behalf of the employee, but the latter remains responsible for any and all tax issues and disputes, if any, with the tax authorities.

If you have any questions concerning the above newsletter, please contact Deloitte tax professionals based in the Tbilisi office:
 
Viktoria Chornovol
Partner
+38 (044) 490 9005
+38 (044) 490 9005     
ext. 2649
vchornovol@deloitte.com.ua
 
Giorgi Tavartkiladze
Senior Manager
+995 (0) 32 24 45 66
gtavartkiladze@deloitte.ge
 
Salome Kakulia
Tax Consultant
+995 (0) 32 24 45 66
skakulia@deloitte.ge

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