The Georgian Parliament endorsed a draft of the new tax code in its second hearing on December 9, after heated debates between government officials and parliamentarians.
The new tax code will be enforced starting from January 1; however after governmental demands the Parliament agreed to postpone enforcement of the reduced value added tax (VAT) for six months. As a result, the new rate of VAT, which will be reduced from current 20% to 18% will be enforced starting from July 1. Before July a 20% VAT will remain in force.
The government compromised over the rates of property tax and agreed on a proposal offered by the Parliamentarians. As a result, those families whose annul income exceeds 40,000 Lari (approximately USD 22,000) will pay an annually percentage on their total property assets, ranging from 0.05% to 0.2%.
The opposition New Rights-Industrialists faction was against the draft tax code. They particularly protested against the postponed of enforcement of the reduced VAT for six months.
According to the new tax code, only 7 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%. The profit tax, however, will remain at 20%.