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Amendment to the Tax Code

The Civil Society Institute (CSI) has lobbied the amendment to the Tax Code.
CSI works on the solution of a legal problem facing the civil society organizations - in the spring of 2012, the Institute held active negotiations with the Ministry of Finances of Georgia in order to eliminate the flaws in the Tax Code of Georgia, which undermine the financial sustainability of non-governmental organizations.

CSI has provided the Ministry of Finances of Georgia with several draft bills on amendments and supplements to the Tax Code. These draft bills aimed to resolve the tax problems identified jointly by CSI and the International Center for Not-For-Profit Law, which create obstacles for the effective functioning of civil society organizations.

One of the issues covered by the draft bills concerned the problem related to the taxation of property of small value (books, seminar materials, etc.) given gratuitously to physical persons by the civil society organizations at the organized events (conferences, seminars, etc.), and withholding the income tax in accordance with their value.

In response to the draft bill devoted to this very issue, the Ministry of Finances of Georgia has offered the compromising version of problem solution. This offer was formulated as a draft law and was submitted for consideration to the Parliament of Georgia.

In May 2012 the Parliament of Georgia has debated this draft law and amended Sub-Paragraph 'l' of Paragraph 1 of Article 154 of the Tax Code. Pursuant to the amendment, a tax agent (including a not-for-profit legal entity) shall be obligated to withhold an income tax only when it gratuitously transfers property to a physical person who does not have a tax-payer's certificate, if the market value of the property exceeds 1,000 GEL.

Prior to the amendments, a tax agent (including a not-for-profit legal entity) was obligated to withhold an income tax during the gratuitous transfer of property to a physical person, regardless of whether the value of transferred property exceeded 1,000 GEL or not.

CSI maintains negotiations with the Ministry of Finances of Georgia and other state agencies in order to eliminate the tax obstacles facing the not-for-profit legal entities.