Official appeals to representatives of higher Governmental authorities from the Association
Official appeals to representatives of higher Governmental authorities
from the Association
The Association of Georgian Virtual Zone Persons continues its effective activities. Increasingly more international organizations are becoming interested in the VZP issues as a result of the activity.
On July 8, the chairman of the Association, Shorena Kopaleishvili, had a meeting with the representatives of EBA, EBRD, and IC (investors counsel). The main activities of the organizations are promoting dialogue between the business community, international financial institutions, and donors; supporting private sector competitiveness through innovation; developing the local currency and capital markets; expanding markets through inter-regional connectivity; At the meeting, they discussed the difficulties faced by IT companies with the status of Virtual Zone Persons. Difficulties, which include the vague law that allows for interpretation, massive audits, and retrospective fining of companies with millions of GEL, which has already become a problem for many businesses and the reason for leaving the market of the country.
On July 12, the chairman of the Association, Shorena Kopaleishvili sent an official appeal to the Prime Minister of Georgia, Irakli Gharibashvili, where she focused on a number of issues that could significantly harm foreign investments and the reputation of the country. She mentioned the fact that, from 2021, the tax approach to taxation of “Virtual Zone Persons” was suddenly changed without any communication with businesses, resulting in the loss of significant revenues and investments, and attracting new investors is complicated due to the current tax approach. Here she shares the information about the taxes paid by businesses that were clearly and precisely prescribed for them by the law. At the same time, she offers readiness for cooperation.
Also on July 12, Shorena Kopaleishvili appealed to the Minister of Finance of Georgia, L. Khutsishvili, with a letter. She underlined two questions about the current issues, to which the business has not received clear answers. 1. Why did such a rigid change of approach take place after so many years with no communication with the business, which had the most adverse effect on the business of each entrepreneur and, in addition, this fact caused hundreds of investors to leave the country and harmed the country’s international reputation; 2. Why are businesses being fined collectively after the fact when there was no situational guidance available at the time and the legal record is still unclear.
The above-mentioned appeals cannot be made public until a response is received.
Furthermore, the Association of Georgian Virtual Zone Persons is moving forward purposefully. Together with its partners (legal and audit companies), they carry out the preliminary work for the appeal to the Parliament with the legislative initiative.
Through the efforts of the Association, the matter is being referred to higher authorities. Therefore, they have more positive expectations regarding the correct resolution of the issue.
There is great hope that there will be a convergence of positions between the parties such that the tax interest of the country will be protected without impinging on the legal activities of investors. We believe with such efforts, the common goal will be achieved and all interested parties will be in a fair win-win position.