April 30 Business and Economic Centre hosted Tax and Customs Legislative Group next meeting. The purpose of the meeting was to inform the MPs on the set of vague clauses in the Tax Code of Georgia. Experts Emzar Jgerenaia and Kakha Kokhreidze presented the following issues:
- Vague clauses in the Tax Code
- Small and medium business accountability
The meeting was attended by MPs and staff members of Budget and Finance Committee, experts, representatives of nongovernmental and international organizations.
The report presented by E. Jgerenaia covered the issues of the vague clauses. The Tax Code of Georgia, as noted, is liberal and one of the best in terms of rates. However, the issue considered is the guidelines attached to the Code that regulate the tax system. It was considered desirable that the guidelines adoption rule be complicated and debated by the Parliament just as in the case of the Code (The similar system is practiced in Germany and China).
The following issues were debated at the presentation:
- property tax
- dues, fees and minimum
- expenditure account
- price formation
- amortization and representation expenses
Dr. Jgerenaia touched upon the enactment of regulations. He noted that this process should be regulated and adjusted. He also highlighted statutory acts and the term of entry of amendments into force the latter causing problems for entrepreneurs.
The subject of the second presentation was small business accountability. Mr. Kakha Kokhreidze explained the definition of small business, noted negative specifications of small tax payers, the cost of correlation which is fixed and negatively impacts small business. He explained that three main components are highlighted among the specifications of the system: stability, simplicity and neutrality. In our case stability is the hardest issue due to the fact that more than 700 articles were changed through 61 legislative acts during the years 2005-2010 while the Code consists of 285 articles.
There are no issues about neutrality. However, there are certain flaws. Neutrality means protection of interests of both sides. However, as awareness of tax legislation is low, small and medium businessman are not fail-safe.
In the end he touched upon the introduction of flat-sum tax. The experts think it will bar development of companies while there are better tools available to contribute to small and medium business.
The presentations were followed by the discussion. The issues of representation expenses and seizing property caused the debates among the experts.
After the meeting it was agreed upon that the MPs and experts elaborate the mentioned issues and have specific recommendations by the next meeting with purpose of reforming the fails of the tax legislation.
