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Up to employers, whether to increase wages by income tax or not

By Natalia Kochiashvili
Wednesday, April 29
The presentation on targeted social assistance and tax benefits in the second stage of the government's anti-crisis plan was held at the Ministry of Finance on April 28th.

The Revenue Service of the Ministry of Finance announced that the scheme for issuing GEL200 compensations is already known. The citizens who were employed and have been fired due to the COVID-19 pandemic will receive compensation based on a document submitted to the Ministry of Finance by their employers and not by the employees.

According to Lasha Khutsishvili, the Deputy Minister of Finance, from May, compensation will begin for those left without pay. Compensation will be available to employees who have received their salary at least once in the first three months of 2020 - January, February and March and will not be able to receive remuneration in the coming months, according to the employer.

The amount of compensation is GEL200 per month for a period of 6 months. Compensation will also be paid to those who have been fired not only by employers but to those who were sent on unpaid leave.

Based on the information (the bank details of the employee, personal data, contact phone number) electronically provided by the employer to before the 20th of each month, the Revenue Service will make a unified list of compensating persons and send it to the State Employment Promotion Agency, from where the funds will be reimbursed directly.

Besides that, salary up to GEL750 has been exempted from income tax. This means a maximum of GEL150 monthly pay for employers. Accordingly, if in the past employers had to pay GEL750 for issuing the salary of GEL600, now they will be able to pay that salary without tax - therefore, spending will be GEL600. In the salaries of up to GEL1500, the first GEL750 was exempted from income tax, and here, too, employers have the opportunity to choose whether to pay the employee the amount received from the benefit.

Khutsishvili says that this will be imposed on all companies operating in Georgia. Judging by the results of the first quarter, this applies to up to 700,000 people. The benefit is regulated by amendments to the Code. The employer and the employee agree on the amount of salary.

Deputy Minister of Finance also introduced the 5 categories of registered self-employed people registered who will receive one-time compensation without submitting additional documents : Entrepreneurs with the status of small businesses and Entrepreneurs who are employed in the market area - these persons are identified according to the declarations submitted by them in the first quarter of 2020 and the checks received using the cash register; Persons who carry out fixed taxable activities. This is a special status designed for individuals who operate in bakeries, beauty salons and also in auto service centers; Microbusiness Entrepreneurs who do not receive funding from the budget, this is the category of taxpayers whose income is up to GEL30,000 and who are not obliged to use the cash register, and on the other hand, their income is fully exempt from income tax up to GEL30,000; The individual entrepreneurs who do not function in any of the above-mentioned statuses and carry out their activities only as individual entrepreneurs. They will be able to identify their 2019 income declaration before April 1st, 2020, as well as the cash register.

Based on these criteria,150,000 self-employed people have been identified who will no longer need to prove their source of income. At this stage, the relevant lists are already being formed.

Self-employed people who are not registered with the Revenue Service fill out an application form on the e-portal of the Ministry of Health and submit a document confirming the source of income.

The amount of compensation for self-employment is set at GEL300 at a time. The procedure for requesting compensation is as follows: a person wishing to receive compensation must submit a relevant request to the electronic portal of the Ministry of Health no later than July 1, this applies to both identified and unidentified self-employed persons. The bank details must be submitted with the request in order for the amount to be credited.

“The information to be submitted to the Ministry of Health is not voluminous. They must present identification information, name, surname, personal number, contact information and bank details in order to be credited to the same account,” Khutsishvili explained.