Amendment to the law
Amendments to Tax code in connection with Covid-19 pandemic
According to the law №5971-სს of Parliament of Georgia (22.05.2020) the amendments have been made in the Tax Code of Georgia (hereinafter “GTC”). Particularly, the 112-116th parts were added to the 309th article of the GTC, according to which all those tax incentives announced by the Government to mitigate damage to taxpayers from Covid-19 pandemic were established as law:
- From May 1 2020, during the next 6 calendar months, the employer is entitled to reduce (not pay to the budget) the income tax payable and charged on the salary of the employee to 750 GEL, if the salary received by this employee from the same employer for 1 calendar month does not exceed 1,500 GEL.
- This tax relief does not apply to the budgetary organization, the National Bank of Georgia and the National Regulatory Authority, also enterprise, more than 50% of shares of which belongs to the state or municipality, and the enterprise established/subsidiary of this enterprise, if the enterprise owns more than 50% of shares in this enterprise.
- The taxpayer is entitled to tax leasing/leasing services by VAT during 6 calendar months (reporting period) from March 1 2020, according to the reporting periods when actual payments of the service fee/the part of service fee are made.
- The Minister of Finance/Head of the Revenue Service of Georgia is entitled to extend the time limit specified in this Code for payment of income tax and/or property tax for separate taxpayers in 2020(including February, March, April and May 2020) no later than January 1 2021. In this case, the taxpayer shall not be imposed by penalty interest stipulated under GTC.
- The Codes of the National Classifier of Economic Types of Economic Activities of Georgia are determined, the implementer taxpayers of which have been exempted from the property tax to be paid in 2020 (including the current advance payments), these activities are:
- The property used in the activities provided under the code 55.1 (hotels and similar accommodation facilities) and/or under the code 55.2 (facilities for recreation and other short-term accommodation);
- The property used in the activities provided under the Code 56.1 (restaurants and mobile food service activities);
- The property used in the activities provided under the Code 79 (travel agencies, tour operators and other booking and related activities).
Note: The tax relief envisaged under this section applies also to the leased transferred in the similar way property, if such property is used in any of the activities specified in this part.
- Providing incorrect information to the tax authority, which led to the unjustified issuance of compensation for the spread of a new coronavirus in Georgia, as defined in the Decree of the Government of Georgia №286, will cause imposing a sanction in the double amount of compensation issued on the basis of this information.
The amendment came into force from 26 May 2020.
Public Decision
About taxation of the right-of-use leased asset by property tax
The new financial standard IFRS 16 came into force from January 1, 2019. According to this standard, the right-of-use leased asset is recorded as a separate asset on the balance sheet of lessee in accordance with the values and rules specified in the standard.
In accordance with the Order №107 of the Minister of Finance of Georgia, a public decision was issued on May 5 2020, which specifies that the right to use the asset under a lease agreement, which is accounted as fixed asset by the taxpayer (lessee) in accordance with the requirements of accounting and financial reporting standards, is not taxable object for the purposes of property tax.
The decision came into force from 9 May 2020.
Amendment to the Order
Filling in the form №2 for submission by non-resident
By the order №116 of the Minister of Finance of Georgia dated May 21 2020, the amendment has been made in the Decree №633 of the Minister of Finance of Georgia about “usage of the tax relief according to the international agreement for the avoidance of Double Taxation and the rule for refunding the tax paid for non-resident” dated December 28, 2011. In particular, the paragraph 11 was added after the paragraph 1 of the article 3, according to which the reason and the basis for withholding tax in Georgia on behalf of a non-resident must be indicated in form №2 by the non-resident or its authorized representative.
The amendment came into force from 23 May 2020 and applies to the administrative proceedings not completed prior to the entry into force of this order.
Amending the rule of declaring and paying property tax for a newly registered enterprise
By Decree №117 (21.05.2020) of the Minister of Finance of Georgia, an amendment has been made to Decree N996 (31.12.2010) “Tax Administration” of the Minister of Finance of Georgia:
The paragraphs K1 and K2 were added to the part 4 of the article 88, according to which the 14th and 15th columns were added to the declaration of property tax. The information about the period of existence of enterprise is filled in the 14th column if the enterprise/organization exists (established, revoked, etc.) incomplete calendar year and indicates the number of months of existence of the enterprise/organization during the tax year.
Also, if the taxpayer is registered from the beginning of the month until the 15th day of the month or is removed from the registration after the 15th day of the month, then the month of registration and deregistration shall be considered as a full month. Otherwise, this month shall not be counted.
And in the 15th column of the declaration, the amount of property tax shall be indicated in proportion to the months of existence of the enterprise / organization during the calendar year.
The amendment came into force from 23 May 2020.