Georgia introduces rules for classification of taxpayers; amends refund procedure

On February 5, 2019, the Georgian Ministry of Finance issued Order No. 30 on the classification of taxpayers, which has entered into force on February 7, 2019.

As stated in the Order, the category of a taxpayer is determined by a special program on the first date of the calendar month, not later than the 15th day of the corresponding month.

The category is determined based on the total amount of taxes accrued in the last 12 months. The Ministry of Finance of Georgia has identified three categories of taxpayers:

  • Small – the total amount of taxes accrued is less than 100,000 GEL;
  • Medium – the total amount of taxes accrued is 100,000 GEL or less than 2,000,000 GEL;
  • Large – the total amount of taxes accrued to 2,000,000 GEL.

The Order also states that, regardless of the above criteria, an entity is determined to belong to the large category of taxpayers if it performs one of the following activities:

  • Activities of an entity holding a banking license;
  • Activities of entities licensed for provision of life insurance, insurance (not life) and / or reinsurance services;
  • Activities of entities licensed or authorized in accordance with the Georgian Law on Electronic Communications;
  • Activity of entities licensed for private broadcasting and / or public broadcasting;
  • Activity of entities related to casinos, holding the appropriate permission to manage the casino
  • Activities of entities under an international agreement in the field of oil and gas.

Another important point of this Order is that the category of the taxpayer can automatically change based on the above provisions. For small and medium-sized businesses, this can happen on the first date of each calendar month, while for a large business it is annually from January 1 and from July 1.

Furthermore, the Order amended the procedure for the automatic refund of overpaid taxes by introducing a form for the automatic refund of overpaid taxes submitted by the taxpayer. The electronic VAT refund system introduced by the Revenue Service allows taxpayers to obtain automatic VAT refunds.  In a vast majority of cases, the Revenue Service has stated the VAT will indeed be automatically refunded whereas a minority of cases will require additional control/audit by the authorities before a refund is granted.

Olga Nadiezhdina
Executive Administrator
Eurofast Global Georgia

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