Sopo Getsadze
The government met the New Year with the new Tax Code. The new Tax Code contains new notions together with new tax systems. The notions of “micro” and “small business” were introduced in the Code for the first time. The tax payment is also differentiated for them. Tax ombudsman (business ombudsman) was appointed who has not made any comments about mass detention and fining of entrepreneurs so far.
A company is considered to be a small business if its commercial turnover is 100 000-200 000 GEL per year. The businessman will not have to pay VAT. They will have to pay only tax attached to the turnover. Head of the Department for Revenues Giorgi Tskhakaia reported to the Human Rights Center that the tax attached to the turnover is 3-5% of the total turnover. If a businessman runs a correct accountancy, she/he will have to pay only 3% but in other case – 5%.
In accordance to the new Tax Code, micro-business is all kind of activities whose yearly turnover does not exceed 30 000 GEL. The Tax Ombudsman Giorgi Pertaia said that “representatives of the micro-business will not have to pay any tax that will simplify their activities.”
The governmental officials said that the amendments introduced by the Ministry of Finances, aims to facilitate privileges and tax responsibilities for the business sector. Economical experts have different opinions about this topic.
Executive director of the Young Economists Association Mikheil Adeishvili shares the opinion of the government and said that introduction of the status - small business - will simplify the activities of the small entrepreneurs who are trading in the shopping malls. “There had always been a problem in the Tax Code that traders could not understand and they could not afford to hire qualified accountant. So, the procedure has become simple for them.”
The president of the Young Financiers and Businessmen Association Merab Janiashvili gives different evaluation to the innovation. He said every legal entity is prohibited to register the product purchased from the micro business. “Whatever big or middle businessman purchases from micro-businessman they cannot register it. Consequently, the price will be raised. Thus, the large company loses desire to have any business-relation with the micro-business.”
In accordance to the Code, GSM system will be inculcated. With the support of this system every accounting data will be linked to the GSM apparatus and the revenue department will control the activities of the entrepreneurs in the online regime.
Economic experts have already responded to the introduction of the system. “Every violation shall be promptly registered in the Tax Department; so, the entrepreneurs will be under a serious control,” said Janiashvili.
It is interesting that the next year budget is in fact restricted. The international grants are also reduced. So, we doubt, the state budget will be filled in with a lot of fines.
The governmental officials do not agree with the opinion; among them is the Tax Ombudsman Giorgi Pertaia. “The government is not keen on imposing fines on businessmen. Everybody is fully aware that the money received from fines is the improved situation in a short time. So, the government is not eager to fine any businessman.”
The head of the Revenue Department Giorgi Tskhakaia repeated the same argument. “Fines cannot and shall not be the source to fill in budget. It does not have any fiscal effect. It is prevention in order to compel everybody to pay taxes and live the same tax life as other honest tax-payers live.”
In accordance to the new Tax Code, the new terms like “Council of Audits” and “Tax Ombudsman” were also introduced. The Minister of Finances will be the head of the Council of Audits. The state institution clarifies that if any company with no past mistakes and shortcomings in its activities is suspected in any crime by a Tax Inspection and fines are imposed on it, the Tax Inspection shall appeal to the Council of Audits in order to estimate fine amount.
As for the Tax Ombudsman, the aim of this institute will be defense of tax-payers. Current ombudsman said it is kind of a bridge between the businessmen and the government.
“The tax ombudsman is entitled to get information about all problems from the businessmen, to study those problems, meet opposite parts of this problem; study their positions and introduce them to the prime-minister and other governmental officials,” said Giorgi Pertaia.
Funding the Tax Ombudsman from the state budget has already raised some doubts among population; they say he will not defend the rights of the businessmen. Part of experts does not agree with the opinion. Expert Davit Narmania said although public defender’s office is also funded from the state budget, he prepares reports about violation of various human rights by governmental officials too. So, the business-ombudsman shall be same case as public defender.
Merab Janiashvili has different opinion whose argument is based on real practice. “The reality is evident. We have already seen how the business-ombudsman works. After his appointment, entrepreneurs were imprisoned and intimidated; however, the business-ombudsman did not protest it at all.”
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