Government Proposes to Postpone Enforcement of Reduced VAT

Chairman of the Parliamentary Committee for Finance and Budgetary Issues MP Roman Gotsiridze spoke against the government?s proposal to postpone enforcement of the reduced value added tax (VAT) law for six months.

The Parliament approved the draft of the new tax code in its first hearing on October 28. According to the draft, VAT will be reduced by 2%, down to 18%. The draft should go into effect on January 2005, after receiving final approval by the Parliament. However, the government has proposed to postpone enforcement of reduced VAT for 6 months.
 
?I am categorically against the postponement of the reduced rates of VAT,? Chairman of the Parliamentary Committee for Finance and Budgetary Issues Roman Gotsiridze told reporters on December 6.
 
According to the new tax code, only 8 out of 22 taxes will remain in force. The rates of some of the taxes will also be reduced as well. In particular, the social tax will be reduced to 20% from the current 33%; income tax – from 20% to 12%, value added tax – from 20% to 18%. The profit tax, however, will remain at 20%.

Parliament will begin discussions over the draft tax code this week.