AmCham Georgia has sent letter to Minister of Finance Machavariani requesting suspension of recent changes in tax law, that requires all companies to pay tax within 5 days of import, rather than the 30 days that many companies are currently allowed. AmCham said this change can only hurt foreign investment inflow and the creation of new jobs. Read full text:
On the 3rd June, 2019 the Ministry of Finance published a change to the procedures for payment of taxes on import that requires all companies to pay within 5 days of import, rather than the 30 days that many companies are currently allowed. This change has been brought-in with no consultation or notice and comes into effect for some of the companies next week.
This change will have a huge impact on the cash flow of importing companies, many of whom were already struggling with recent large increases in Excise Duty. As a result, many companies will have to take on loans, increase prices or even lay-off staff.
We are also very concerned about what this says about the predictability of the Georgian business environment. We have already expressed concern many times about the way in which problems in Georgia’s judiciary create uncertainty facing Georgian businesses. If the government is going to make changes to tax policy without consultation or proper notification, then that is a terrible signal to investors and will undoubtedly negatively impact the business environment and investor confidence more generally. This can only hurt foreign investment inflow and the creation of new jobs.
We therefore, would request that this change is suspended to allow for appropriate discussion about the impact of such a change.
As always, we stand ready to meet and discuss these issues at your convenience.
R. Michael Cowgill
American Chamber of Commerce in Georgia
Secretary General EU-Georgia Business Council
Prime Minister, Mamuka Bakhtadze Business Ombudsman, Irakli Lekvinadze
The last updated text about Import Taxes on State website is dated by: 31 July 2012
What to know about the clearence of goods?
Within what timeframe shall the goods be declared in a relevant goods operation?
- Within 30 days from the date of importing the goods
- The Revenue Service is authorized to reduce or extend this deadline by 60 days
- In case of temporary storage of goods in the customs warehouse the timeframe within which the goods shall be declared, increases up to 5 calendar years.
Who is to fill out goods declarations?
What documents are to be submitted for the clearance of goods?
The following documents are required for the clearance of goods:
- Invoice, the document certifying the purchase of the goods;
- Waybills, such as a consignment note (for a shipment), a railroad bill of lading (for railway transportation), an air waybill (for air transportation), CMR or TIR documents (for road transportation);
The transportation documents shall contain the general description of the cargo, the quantity of seats, gross and net weight, the goods code, the number of container, and information on the carrier, the shipper of goods, and place of loading the goods as well as the destination and about the consignee of the goods.
- In case non tariff measures apply to the goods or they are subject to additional customs control, a relevant license, a permit, a certificate and other necessary documents shall also be submitted.
What information shall be included in the document certifying the purchase of the goods?
An invoice, the document certifying the purchase of the goods, shall contain the following main information:
- The date of issuance of the document and the number thereof;
- Particulars of the seller;
- Particulars of the buyer;
- Description of each type of goods (e.g. a men cotton coat, or a men wool coat)
- Quantity of each goods (pieces, kilograms, etc);
- Price of each type of goods;
- The document shall certify the fact of actual selling and buying (the document shall be attested by the seal, if any, or by other means of attestation);
- The terms of delivery.
Nota Bene! An incompletely filled out document certifying the purchase of the goods causes delays in the procedures, specifically in order to fill out the declaration, you will need to order the examination of goods (for establishing the quantity of goods, the price or/and the code of goods, as far as necessary)
What taxes are to be paid when declaring the goods?
Export, re-export, transit, and the warehouse, and a free zone are exempt from taxes.
Import: Import Duties:
Import duty is 0; 5; 12 percent of the customs value of the goods (Article 197, Chapter XXVII of the Tax Code);
VAT is 18 percent of the amount of import (Article 169 of the Tax Code of Georgia);
Excise – the rate of excise is differentiated (Article 188, Tax Code of Georgia):
Inward processing: If only the goods of foreign origin undergo processing and the product obtained as a result of the processing is exported, no taxes are levied on this operation.
Outward processing:When goods are exported the duty levied on exports applies and when the goods processed are brought in the country a relevant import duty shall be paid. No import duties apply to the goods processed free of charge.
Temporary Admission: Total or partial relief from import duties may apply to the goods.
VAT is 0.54 percent of the amount of temporary admission on the territory of Georgia per calendar month or fraction of a calendar month but no more than 18 percent (Article 18, Tax Code of Georgia).
Import duties are 3 percent of the amount to be paid on the date on which the customs declaration of temporary admission was registered and the goods were placed under the importation procedure (Article 197, Tax Code of Georgia).
Service tariffs: (N96 Decision of the Government of Georgia on Approval of the Prices and Tariffs for the Services provided by the Legal Entity of Public Law (LEPL) Revenue Service).
What is the timeframe for paying import duties and service fees?
- Import duties and service fees may be paid within 5 days from the clearance of the goods;
- In case of prior declaration import duties and service fees may be paid within 15 days from the release of the goods;
- Those entities on the Gold List may pay import duties and service fees within 30 from the release of the goods;
- In case of importing goods up to the value of 10 000 GEL by air transport in the checked-in luggage or/and in the carry-on bags, as well as parcel posts import duties and service fees may be paid within 30 days (in this case a simplified declaration applies) from assigning the registration number to the declaration.
What is the value of goods that can be cleared at the border?
- Imported goods up to the value of GEL10 000 (except in the customs crossing points „Samtatskaro“, „Akherpi“, „Gardabani“ and „Mtkvari“);
- Goods of any value imported by air transport in the checked-in luggage or/and in the carry-on bags;
- Goods with the customs value less than 3000 GEL as declared in the goods outward processing transaction;
- Goods intended for personal use of non-resident natural persons when entering the territory of Georgia temporarily (for a business trip or under the labor agreements);
- Export of goods with the value less than 15 000 GEL or export of the goods accompanied with the bill of lading;
- Goods with the value up to 15 000 GEL of a natural person entering the territory of Georgia after having been abroad for more than every 6 months (except vehicles, excise goods and food products), which are not intended for economic activities;
- Goods brought in when entering the territory of Georgia for permanent residence (including furniture, domestic items) and which are not intended for economic activities;
- Other goods brought in the Batumi Port or Poti and Kulevi Ports and Poti Free Industrial Zone in a container together with vehicles.
- Goods with the value up to 15 000 GEL of a natural person entering the territory of Georgia after having been abroad for more than every 6 months (except vehicles, excise goods and food products), which are not intended for economic activities, and additionally a refrigerator, computer and TV import, which are not intended for economic activity for diplomats being rotated from diplomatic representations or consular offices of Georgia abroad. Also, the import of goods when a person enters the territory of Georgia for permanent residence (which is verified by a relevant document issued in accordance of the rules established by the Ministry of Justice of Georgia) and which are not intended for economic activity.
When diplomats, being rotated from diplomatic representations or consular offices of Georgia abroad, and the persons entering the territory of Georgia for permanent residence, are entitled to tax concessions their vehicles are cleared in relevant places.