On 2 July 2019, a Draft Law amending the Tax Code of Georgia was adopted by the Parliament of Georgia.
The objective of the Draft Law was the approximation of the Georgian Tax Legislation on Value Added Tax (VAT) with the EU Directive 2006/112/EC dated 28 November 2006, in compliance with the Agreement on Association with the European Union.
The Amendments stipulated in the Draft Law touch upon all the provisions regulating VAT in the Tax Code of Georgia.
The main changes include:
- new rules for determining the place of supply of services;
- abolishment of VAT applicable to temporary imports;
- amended rules applicable to continuous supplies;
- VAT on prepaid amounts;
- VAT exemption on the supply of samples or gifts of small value;
- taxation of goods retained by taxpayers following the discontinuation of taxable economic activities; and
- new VAT rules for vouchers.
Targeting the harmonization of the VAT legislation with EU Directive 2006/112/EC, The Ministry of Finance announced that the proposed amendments to the Tax Code will not enter into force as of 1 January 2020 as was initially planned, but rather as of 1 January 2021. Affected companies are advised to seek assistance in determining the impact of the amendments on their businesses.
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