Member of the Parliament of Georgia, Zakaria Kutsnashvili, on air on GDS, stated: "With exemptions from corporate income and income taxes, we have provided villagers and farmers with GEL 200,000 in annual income to incentivise their production. Based upon my calculations, all of this will give us tangible results in 2016-2017."

Legal relations in regard to tax obligations in Georgia are regulated by the Tax Code of Georgia. The current Tax Code of Georgia went into force on 1 January 2011. Articles 82 and 99 deal with the exemption of income and corporate income taxes, respectively.

The 8^th

Parliament of Georgia held its opening session on 21 October 2015. At that time, the version of the Tax Code of Georgia as of 20 October 2012 was valid. According to Point K of Article 82 of the consolidated version of the Tax Code of Georgia, as of 20 October 2012: "Income received from agricultural products produced by an individual employed in the agricultural sector in Georgia is exempt from income tax until 1 January 2014 provided that the gross income received from these products by such individual during the calendar year does not exceed GEL 200,000." Additionally, the salaries of individuals under the aforementioned category were also exempt from income tax.

According to Points E and V of Article 99 of the Tax Code of Georgia: "Profit received from agricultural products prior to their industrial processing (prior to the changing of a commodity code) produced in Georgia by an individual employed in agricultural production until 1 January 2014 provided that the gross income received by such individual does not exceed GEL 200,000 during the calendar year" together with "the portion of profit received from agricultural activity that is reinvested in the same field" are exempt from corporate income tax. Of note is that after the meeting of the 8^th

Parliament of Georgia, according to Law N189 adopted on 28 December 2012, Point V of Article 99 of the Tax Code of Georgia was amended. The new version of the article introduced an additional requirement – only that portion of income that is reinvested in the agricultural field during the following three years from the end of the corresponding tax year is exempt from corporate income tax.

On 30 July 2013, the new Law N906 was adopted which amended the Tax Code of Georgia once again. The duration of the validity of Points K and Z.a of Article 82 and Point E of Article 99 was extended to 1 January 2017. There were no other changes of content in the descriptive parts of the legal norms. Of additional note is that as a result of changes of a technical nature in Point K of Article 82, the term Individual was replaced with the term Person. Therefore, the legal norm now covers legal entities with a seemingly expanded circle of people receiving the preferential tax treatment. However, according to Article 79 of the Tax Code of Georgia, income tax is only paid by an individual. Therefore, this amendment did not affect those individuals under preferential tax treatment.

In order to fully analyse the issue, it is necessary to take those tax preferences into account which were introduced by Law N817 on 12 July 2013. However, Mr Kutsnashvili has not mentioned these. According to Law N817: "Profit received from agricultural products produced in Georgia by an agricultural cooperative" together with the "dividend received from an agricultural cooperative by a member of that agricultural cooperative" and property under the ownership of an agricultural cooperative (with the exception of land) including the leased movable property are exempt from taxation.

Conclusion According to the version of the Tax Code of Georgia which was valid as of 20 October 2012, individuals and legal entities employed in the agricultural sector were exempt from income and corporate income taxes before 1 January 2014 provided that their income received from agricultural products did not exceed GEL 200,000 per annum. The salaries of individuals under this category were also exempt from income tax. The portion of the profit received from agricultural products which was reinvested in the agricultural field was also exempt from corporate income tax before 1 January 2014 notwithstanding the total income of a taxpayer. After the changes enacted in the Tax Code of Georgia by the 8^th

Parliament of Georgia, only the validity of the preferential tax treatment was extended whilst a new requirement was introduced to use the preferential tax treatment for the reinvested portion of the profit. According to the amended version of the Tax Code of Georgia, only that portion of income which is reinvested in the following three years from the end of the corresponding tax year is exempt from corporate income tax.

The norms of the preferential tax treatment named by the MP had already been in force before the 8^th

Parliament of Georgia held its opening session and only the duration of their validity was extended whilst the description of one of the norms even became stricter.

FactCheck concludes that Zakaria Kutsnashvili’s statement is FALSE.