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The News in Brief

Friday, March 25
Corporate Income Tax Reform Delayed Until 2017

Citing a request from business associations, the Finance Ministry said it has decided to postpone the enforcement of corporate income tax reform by six months.

According to the proposal, which is based on the Estonian model, corporate income tax (a regular rate of which is 15%) will only apply to distributed profit; undistributed profits, reinvested or retained, will not be subject to income taxation.

The proposed changes in the tax code will still go through Parliament for confirmation, but, if adopted, they will be brought into effect from January 2017, according to the Finance Ministry.

In the event that the reforms had been introduced this year, the government was expecting a drop in tax revenues, which would have required budget cuts of about 350-400 million GEL this year, Finance Minister Nodar Khaduri, said on March 22. He suggested that these changes will no longer be needed because of the six-month delay in enacting the reform. However, he did not rule out other budgetary changes for the purpose of diverting some administrative expenses to funding infrastructure projects.

The government’s initial proposal was made excluding banks, insurance companies and microfinance institutions from the planned corporate income tax reform. The Finance Minister, however, said on March 22 that changes will also apply to the financial sector, but, unlike other businesses, from 2019 and not from January, 2017.

“We have analyzed business associations’ proposal and agree that the changes should go into force from January 1, 2017,” Finance Minister Khaduri said on March 22. “I want to ask the Georgian Parliament to speed up discussion of the bill as much as possible in order to have it adopted in April if possible.”

While expressing their support to the proposed reform, the American Chamber of Commerce (AmCham) in Georgia and Business Association of Georgia (BAG) have called on the government not to hurry with its enforcement and to postpone it until next year.

In a letter to the PM in early March, AmCham Georgia said that that bringing the proposal into effect “in the middle of the tax year will be quite problematic for implementation.”

“Our concern is that this is simply too soon to allow companies to put in place the necessary changes in their accounting practices. There are also concerns that, in order for companies to be able to change to the new system half way through the year, they would have to ‘close’ their financial year in the summer and in the New Year. This would create large administrative burdens that may negate the benefits intended in the change for the current year,” Sarah Williamson, the president of AmCham in Georgia, wrote in the letter.

BAG also voiced similar concerns and said that “hasty implementation” of the proposed reform was fraught with risk. BAG’s executive director, Irakli Aslanishvili, also pointed that some potential shortcomings of the proposed bill may only surface when it is put into practice, which would require prompt legislative changes – something that might be problematic in the view of upcoming parliamentary elections in October, which could have delayed urgent amendments until after Parliament is convened again. (

Massive crude oil theft: Two men arrested in Georgia

Two men have been arrested for regularly stealing large amounts of crude oil from the BP-operated Baku-Supsa Pipeline in Georgia.

Georgian police detained two men in the central Georgian village of Ruisi for the crime which, if proven was committed, will see the offenders go to jail for up to 10 years.

Police said an investigation revealed that the offenders allegedly broke into the 833km-long oil pipeline, which runs from the Sangachal Terminal near Baku, Azerbaijan to the Supsa terminal in Georgia. The men allegedly installed a tap at the broken pipe area and fitted a smaller pipeline to the broken pipe that transported oil to a personal reservoir about a kilometre away.

Consequently, a portion of crude oil permanently ran from the Baku-Supsa Pipeline to their personal reservoir.

Law enforcers did not specify how long the men had allegedly been siphoning oil but said it was an act of "massive theft”.

When transporting the stolen oil from Ruisi Village to Tbilisi by car, the alleged offenders covered the tanks with vegetables to disguise them.

Once in Tbilisi, the crude oil was stored in reservoirs in an old factory on Tavtchrelidze St, near the Kakheti Highway. Afterwards, the oil was processed and sold.

The Baku–Supsa Pipeline is a refurbished Soviet-era pipeline with several newly built sections. It has six pumping stations and two pressure reduction stations in western Georgia.

The four storage tanks at the Supsa terminal have a total capacity of 160,000 cubic metres. The capacity of the pipeline is 145,000 barrels per day with proposed upgrades to between 300,000 to 600,000 barrels per day.

The pipeline runs very close to the Administrative Boundary Line (ABL) that separates Georgia and its Russia-occupied Tskhinvali region (South Ossetia). Last summer Russia advanced 2km into Georgian territory, which saw certain segments of the oil pipeline fell behind the new "border” signs. (

Prosecutor’s Office to do its best to make Davit Akhalaia appear before Georgian judiciary

The Chief Prosecutor’s Office of Georgia will use all international instruments and possibilities in order to make convicted Davit Akhalaia appear before the Georgian judiciary, reads the statement of the Prosecutor’s Office.

The agency has released the statement in response to the fact that he was removed from Interpol’s wanted list.

According to the Prosecutor’s Office, the Interpol General Secretariat has made the decision according to the instructions approved on February 18 by the executive committee according to which the issues of refugees are differently regulated.

According to the Prosecutor’s Office, Data Akhalaia was granted refugee status which caused the annullment of his wanted status.

According to the statement, this is not the only case of the search being called off for a wanted man, as the Interpol General Secretariat has also ceased looking for another 209 people wanted by different countries. (