New Tax Code Approved

The Georgian Parliament approved the new tax code during its third and final hearing on December 21, with a 107 to 11 vote.
 
?The draft tax code underwent radical changes after being discussed in the Parliament and the MPs have greatly contributed to it,? Georgian Parliamentary Chairperson Nino Burjanadze said at the Parliament?s session on December 22.
 
According to the new tax code, only 7 out of 22 taxes will remain in force. The rates of some of these 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%.

The new tax code, which, as quoted by Finance Minister Zurab Nogaideli, ?should define the country?s economic policy for decades,? will be enforced starting from January 1, 2005.

However, as a result of the compromise reached between the Cabinet and the Parliament, a reduced 18% VAT will be enforced only from July 1, 2005,
 
Taxes on gambling businesses and excise taxes on petroleum products, tobacco, ethyl alcohol and wine will increase, in an attempt to cover the backlog of 300 million Lari that will be created as a result of the cancellation and reduction of other taxes.