Presentation held by Mrs. Lily Begiashvili, Deputy Head, Revenue Service of Georgia, within the Regional Workshop on Georgia's anti-corruption and public service delivery reforms (22-24 September 2011).

1. Reforms at Georgia Revenue Service
Batumi, Georgia
22-24 September, 2011

2. Summary
• Reforms in Tax and Customs Spheres
• Electronic Tax Administration
• E-Customs

3. • Georgian Business Sector’s expectations after Rose Revolution:
– Removing a daily threat of corruption
– Creating a legal system that was predictable rather than
arbitrary
– Ensuring free, open and competitive economy
• Reforming Georgia into the easiest and the most attractive
place for doing business

4. Reforms in Tax and Customs Spheres

5. Institutional Reforms
Mediation and Dispute
Tax Resolution Department
Customs
Customs
Tax Administr
International Relations
Administ ation
Department
ration
Tax Prevention
Department Legal Department Economic Border
2007 Protection
Department
Administrative
Department
Audit
Department
IT Department Customs Clearance
Department
PR and Marketing
Service Revenue
Department
Department
Service
HR Department
Since January 2011 – New and unified Tax and Customs Code

6. Business Climate: Low and Competitive Taxes
• From 26 types of taxes in 2003 - to only 6 types of taxes in 2004
• Income Tax - 20% (by 2014 - 15%)
• Corporate Tax – 15%
• VAT - 18%
• Property Tax - 1%
• Import Tax - 0%; 5%; 12%
• Excise Tax (differential)
• State revenues increased by 80% in 2005‐2007

7. Fair, Simple and Reliable Tax System
• Personal Tax Agent
• Advance Ruling
• Tax Agreement
• Special Tax Regimes – Micro and Small
Businesses
• Good Faith Principle and Tax Ombudsman
• RS Commission for Production Loses
• Risk Based Audits

8. Alternative Tax Audit
High Revenue Service
Risk
Companies
Alternative
Medium Risk
Companies
Audit
Revenue
Service
Low Risk Companies

9. Mediation vs. Dispute Resolution
Out of 1200 complaints in 2011
Decision January February March April August
Refused 70% 75% 67% 65% 15%
Partially decided in 18% 18% 23% 22% 10%
favor of a company
Fully decided in 11% 8% 10% 13% 75%
favor of a company
Trend 29% 26% 33% 35% 80%

10. District Tax Officer - from Control to Partnership
 Bringing services to
taxpayers
 Advising, informing and
educating taxpayers

11. Customs Reforms
Tariffs
Before 2007
After 2007
(16)
12% 14% 15%
16% 17% 18% 12%
20% 25% 30%
5% 6% 7%
5%
8% 10%
4% 0% 0%

12. Customs Reforms
Tariffs

13. Customs Reforms
• Before 2005 • After 2009 import
import procedures procedures
required: require:
54 documents 4 documents

14. Customs Reforms
• Special VAT Regime
• Golden List
• Certificate of origin
• Unified customs and revenue taxpayer files
• Creation of Customs Clearance Zones in Tbilisi, Batumi,
and Poti

15. Electronic Tax Administration

16. Tax Returns Filing before 2009
For submission of
Taxpayer brings filled tax returns to tax tax returns tax
office or sends it via insured post
payer was
enforced to wait
in long queues
Tax inspector receives and certifies tax
returns submission fact
Submitted tax Tax return Correction of Data from Processed
return is data mistakes in tax submitted returns are
transmitted to the manually returns causes declaration is transmitted
information put in joint delayed reflected to the to the
processing database calculation of personal card of Archive
division tax liability tax payers

17. Electronic Filing after September ’09
Tax payer fills and  Electronic tax return is assigned the
sends electronic reference number
tax return via  Tax returns are electronically archived
internet

18. Electronic registration
SMS & E-mail
Electronic filing
Video
Tax Code Applications
Frequently Electronic VAT Invoices
Asked
Questions
Integrated Tariff
Data
protection
Customs Clearance
Zones
Internet
payments
Business Environment
Collection of Payments
Accelerated
services Mortgage/Arrest of Property
Postal Parcels Appeals
Declarations
Tax Free Notifications
Business Map

19. Only 2% of Time
• According to the Enterprise Surveys Georgia ranks
#1 in Eastern Europe and Central Asia

20. RESULTS: Minimize corruption risks
Ensure full performance monitoring

21. Businesses on the
Map Layers
marked area
Report 26.11.2010
Statistics
Implemented measures - Details 36
Marked area
Control purchases - Details 150016
km2
Population on the marked area 543
Chronometric checks -Details 3
Number of taxpayers 17
Stock-takings/Inventories - Details 2 RS Manager
Bread production 4
Clothes shops
Penalties -Details 5 5
Construction business 1
Sealings - Details
Hotels 2 1 USER
Restaurants 4
Examinations - Details 7
Financial serivces 1
Audit procedures - Details 2
WWW.RS.GE

22. New Approach
Crypto
Module
GSM
Registering Network
Financial
Means
Server
Tax Receipt with bar
code
Collecting Terminal
Customer

23. E-Customs

24. ASYCUDA World
Risk Criteria Random Selection Module
Red channel
(Physical inspection)
Yellow channel
(Documentary check)
Green Channel
(No prerelease check)
’’ASYCUDA”
Automated System of Customs Data Blue Channel
(post clearance audit)

25. Risk Distribution
Import Export
31%
18% 10%
35% 1%
42%
5% 56%

26. Ministry
Simplification of Procedures
of
Internal
Single Window
Customs
Affairs
Ministry
of
Brokers
Defense
TRACKER 7
Bonded Ministry
MINISTRY OF DEFENCE
E-
MINISTRY OF ECONOMY AND
Wareho SERVER
DATA of
uses Customs
SUSTAINABLE DEVELOPMENT
Health
MINISTRY OF ENVIROMENT
AND PROTECTION OF
NATURAL RESOURCES
License/ SERVICE AGENCY
Permit OF THE MINISTRY OF
Ministry
INTERNAL AFFAIRS
Railway of
Justice
REVENUE SERVICE
Airlines

27. Before Creation of Customs Clearance Zones
Examin Warehous
Clearance ation e
Broker Clearance
Border Bank Service (in case Service Warehouse
For Center of red (in case of
Crossing Warehous for Center
e Payme Declaratio corrido red
Point Release
nt n r) corridor) of goods
15 – 30 30 45 10-30
1 -2 10-30
minutes minutes minutes minutes 30 minutes
hour – 2–3 30 minutes minutes
-
hour hour days

28. After Creation Customs Clearance Zones
Border Crossing Points Customs
In case of standard procedures – in Clearance Zones
average 15 minutes
In case of red corridor – average 45 In case of standard procedures –
minutes in average 15 minutes
In case of green corridor - average 5
minutes (passport data registration In case of red corridor - up to 1
control and customs procedures)
hour
Advance Declaration Case
Payment of Customs Clearance Fees and Import
Duties are postponed by 5 days

29. Why Customs Clearance Zones?
 Clearing goods from office via www.rs.ge
 Reduces paper-related costs
Advanced review and preparation of documents
 Translation of Invoices
 Collaborates securely with geographically dispersed clients
 Filling & Processing:
- Land, Air, Sea and Railway declarations
- 750 declarations a day (on average)
 Working hours: 24/7
 Clearance Time: 15 minutes in average
Transportation of goods to the place of destination

30. Time line for documentary checks
Time

31. Past Today Tomorrow
Joint use of BCPs
Risk management system
100 % control Risk profiles
Random selection
Turkey
“Blind Control” Sarpi BCP in place
Azerbaijan
Proposal feed-back
No risk analysis or
assessment
Relevant Access to the database of Ukraine
1) Patrol Police Interexchange of advance
information/agreement is signed
2) House of Justice
8 Different agencies
on the border
• National Agency of • Notary
Public
• Civil Registry
Chamber of
Armenia
Registry Georgia Negotiation process

32. Reforms are never enough . . .
Reforms go on . . .
www.rs.ge