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Georgian tax news, May 2012

May 2012

Georgian tax news, May 2012Double Tax Treaties

In May, the President of Georgia signed Decrees #378, 411 and 423 ordaining the Government of Georgia to sign the treaties on the avoidance of double taxation of income and capital gains and the prevention of tax evasion between Georgia and Sweden and San-Marino and to sign the memorandum of amendments introducing changes in the double tax treaty with Austria.

By its Resolution # 6115, the Parliament of Georgia has ratified the double tax treaty agreement between Georgia and Serbia. The effective dates of the ratified treaties will be known once the governments of the countries exchange the notes.

Amendments to the Instructions on Tax Control Procedures

With effect from 16 May 2012, the Minister of Finance of Georgia issued Orders #164,165 and 166 and introduced changes and amendments to the instructions “on the rules of selecting the persons for performing tax control, current control procedures, writing-off inventory, measures of enforced collections of tax liabilities and handling of tax offence cases.” These amendments clarify a number of articles and introduce additions to the chapters of the instructions. Among them, the most noteworthy changes include the following:

  • The instructions further clarify the rules of cash control machines registration and withdrawal from the register in case of their damage. Updated Appendix #9 to the act of transferring cash control machines for repair/ return and Appendix #10 to the act of reserve cash control machines setup and relocation to and from site during the period of the main machines’ repair are also attached to the instructions;
  • The instructions provide the rules and list of documents required for obtaining a document which would serve as a cash receipt from the Revenue Service of the Ministry of Finance of Georgia;
  • According to the changes, if a gambling taxpayer obtains license during the reporting (quarter) period, the note for verifying gambling tax payment will be issued for the current reporting quarter and the tax will be paid proportionately based on the remaining days of the quarter. If the license covers Systemic-electronic games as well, the gambling tax for such games will be paid proportionately to the remaining days.
Amendments to the Instructions on Declaration of Goods in Georgia

In May 2012, the Minister of Finance of Georgia issued Order #157 and 159 approving the amendments to the Instructions “On the rules of movement and declaration of goods in the economic territory of Georgia”. The changes further clarify the terms and conditions of obtaining a Guarantee for commencement of business permitted in a duty free outlet. The amount of Guarantee should be the GEL equivalent of Euro 50,000 and must be provided for the whole period of business activity permitted in such duty free outlet.
The amendments envisage simplified procedures for the members of the "Golden List" for the importation of goods subject to periodic declaration in Georgia.

Instructions of the Revenue Service of the Ministry of Finance of Georgia

In May 2012, the Revenue Service of the Ministry of Finance of Georgia issued instructions on application of Articles 9, 111, 112, 113, 115, 119 and 150 of the Tax Code of Georgia. The instructions include comments of the Revenue Service and situational examples related to taxation of liquidation distributions of a legal entity, definition of economic activity, deduction of depreciation expenses on fixed / intangible assets, fixed assets repair expenses and the cost of preparatory services for geological surveys and the extraction of natural resources for corporate income tax purposes.