The FINANCIAL — Leasing regulations in Georgia have been improved. Legislative changes have impacted on the Civil and Tax Codes. The new law also changed the taxation system in the country.
The idea is that leasing will become more profitable for leasing businesses in Georgia and will support businesses at the same time. Companies are expected to use leasing as an alternative funding mechanism.
Asset finance or leasing is a way of purchasing equipment, machinery or other assets without having to pay the full amount upfront.
“In Georgia leasing was not in demand as people did not previously have information about this,” Nana Mikashavidze said. “We did not try to introduce a leasing service to society because the law was not regulated. Now, as we can offer society a real programme and real plans, we will start introducing a leasing campaign in Georgia,” she added.
Improvement of the leasing regulation law is an initiative of the Ministry of Finance of Georgia, Business Association of Georgia and Leasing Association of Georgia. It was also supported by the Economic Prosperity Initiative, procured by USAID.
There are three local leasing companies in Georgia which hold 95% of the leasing market. These companies are JSB TBC Leasing, Georgian Leasing Company and AG Leasing.
The highest demand on leasing is from building, transport, medical and agriculture sectors in Georgia according to the Leasing Association. Therefore the Association itself prioritises the agriculture sector as well. As for EPI, its preliminary research and assessments identified the following sectors and value chains for initial assistance: agriculture value chains, information and communication technologies, transportation and logistics and textile sectors.
“This project will raise the competitiveness of the country,” said Tamar Razmadze, EPI Public Awareness Manager. “Raising the country’s competitiveness means improving several spheres such as the agriculture and manufacturing fields. Finances are one of the factors which will help the development of these fields. That’s why we decided to work on leasing legislation with the Georgian Government and Business Association. As a result of our cooperation we already have a new leasing law which is based on international experience. We are now waiting for the development of the above-mentioned fields,” she added.
“Leasing promotes economic growth and reduces the level of unemployment. It has particular importance for small and medium business,” said Nana Mikashavidze, General Director of the Leasing Association. “Leasing competes with traditional banks, contributes to the development of financial projects, innovations and secondary markets. It will increase the interest of international manufacturers on the Georgian market. This will increase import and therefore the prices of products will be more affordable. Georgia is creating the possibility of leasing transactions time by time,” she added.
The main principle of the new leasing law is to change things that disturb the economic developing process. “Leasing should be on equal terms with other sectors. Leasing Taxation should be proportional to its economic substance. Transparency, perceptibility and accuracy are the main principles of the leasing law,” said Giorgi Maisuradze, representative from the Revenue Service. “The old leasing law hindered economic growth of the country. Some articles in the Civil and Tax Codes imposed discriminatory taxes on legal entities. Because of this leasing could not contribute to capital investments of local companies as for example it does in other countries. Now this problem has already been solved,” he added.
Discussion about this post