On 29 July 2013, the Parliament expeditiously approved amendments to the Tax Code of Georgia which, along with others, included an amendment concerning a gradual increase of excise tax for tobacco starting from 1 September 2013.
According to Pavle Kublashvili, Member of the Parliamentary Minority from the United National Movement, the growth of excise taxes for tobacco could stimulate contraband of tobacco. Pavle Kublashvili states: “Presently Georgia is renowned in the region for its remarkably low tax rates. Big changes could be triggered by even a small modification of excise taxes.”FactCheck
set out to check how low the tax rates of Georgia really are as compared to other countries in the region.In 2005 significant reforms
were introduced into the Georgian tax system according to which the majority of taxes have been eliminated. Prior to 2005 there were 21 taxes in Georgia whereas nowadays there are six as follows:
- Value Added Tax (from 20% has been reduced to 18%)
- Income Tax (20%)
- Profit Tax (corporate tax 20% has been reduced to 15%)
- Excise Tax
- Property Tax (1%)
- Customs Tax (0%, 5% or 12%)
a study of world economies based on three main indicators: 1) the number of taxes paid by an average citizen per year, 2) the amount of time spent on complying with taxes and 3) the total tax rate in the country.Based on the Paying Taxes 2013 study, in the ranking covering 185 countries Georgia currently occupies 33rd place while prior to 2005 its ranking was 39th.
As for the tax rates in particular, according to Paying Taxes 2013, Georgia has some of the lowest tax rates in the Central Asia and Eastern Europe region. The total tax rate in Georgia amounts to 16.5% whereas the average indicator in the region is 41.3%. Georgia has the third lowest total tax rate in the region, surpassed by Kosovo with 15.4% and Macedonia with 9.4%.
The following countries are included in the Central Asia and Eastern Europe region in Paying Taxes 2013: Georgia, Armenia, Azerbaijan, Turkey, Russia, Ukraine, Belarus, Kyrgyzstan, Tajikistan, Uzbekistan, Macedonia, Kosovo, Montenegro, Bosnia and Herzegovina, Kazakhstan, Israel, Moldova, Croatia, Serbia and Albania.
According to the joint report, Paying Taxes 2013, prepared by the World Bank, International Finance Corporation and PricewaterhouseCoopers, Georgia has remarkably low tax rates in the Central Asia and Eastern Europe region. Georgia has the third lowest total tax rate in the regional ranking.Consequently, we conclude that Pavle Kublashvili’s statement: “Presently Georgia is renowned in the region for its remarkably low tax rates,” is TRUE.