Meeting in the parliament on the legislative changes related to taxation of companies with the status of Virtual Zone

In connection with the application initiated by the Association of Georgian Virtual Zone Persons and Kreston Georgia relating to the legislative changes envisaging taxation of companies with virtual zone status, a meeting was held on February 27, 2023, between Mr. Davit Songulashvili, Chair of the Sector Economy and Economic Policy Committee of the Parliament of Georgia, Shorena Kopaleishvili, Chairman of the Association of Georgian Virtual Zone Persons, and representatives of the European Business Association.

The meeting was organized and supported by the European Business Association.

Shorena Kopaleishvili, Chairman of the Association of Georgian Virtual Zone Persons, introduced the following issues to Mr. Davit:

• Existing challenges and underlying causes of companies with virtual zone status from 2021 to today;

• The approach of the tax authorities of Georgia regarding the taxation of Virtual Zone Person’s profit in 2020-2022;

• Position of Business Ombudsman;

• The need for clarification of relevant legislation

The position on the first issue was presented on July 2022 through #1-9465/22 application which describes the current developments, reasons and results for companies with Virtual Zone Persons status. The application is delivered to the committee in written form. The Association has additionally presented information confirming the development dynamics for the aforementioned business, which encompasses information regarding the taxes paid to the state budget of Georgia by companies with this status in the span of 2011–2021.

The approach of the tax authorities of Georgia regarding the taxation of virtual zone person’s profit has been changed several times in 2021-2022 which is confirmed by the issuance of three different methodological references. The detailed position of the Association and partners is presented here, which was also delivered to the Committee in written form.

The position stated by the Business Ombudsman was of crucial importance, supporting the main concerns of businesses. The position is also delivered to the Committee in written form.

Shorena Kopaleishvili has once again emphasized the vital importance of defining the legislation in a way that does not allow for interpretation and with the precise meaning that ensures the stable functioning of business and the tax interests and goals of the country.

Mr. Davit Songulashvili, the Chairman of the Committee has expressed his readiness to study the issue more comprehensively and has also made the decision to get acquainted with the position of the Ministry of Finance of Georgia regarding the expediency of legislative changes as soon as possible.

A further strategy of cooperation was planned. 

The Association of Georgian Virtual Zone Persons alongside its partners continues to actively work to improve the business environment for member companies and protect their interests.