The Revenue Service under the
Ministry of Finance is changing the practice of taxing companies operating in
free industrial zones - in particular, it cancels income tax incentives for the
companies operating in FIZ.
According to the executive director
of the Hualing Free Industrial Zone Soso Nibladze, the preferential tax regime
has been in effect for 10 years, including for the companies engaged in
“However, the Revenue Service has changed its approach. Now tax
officials call representatives of companies operating in the FIZ and recommend that to start paying
income tax. When asked what are the legal grounds for these recommendations,
they do not receive a full answer. No changes to the legislation have been
adopted yet, ”he explains.
According to Nibladze, among
the arguments in favor of this approach is that “trade” is not mentioned among activities the companies in the FIZ are
engaged although it is not directly banned.
“The approach that
everything which is not forbidden is allowed" is quite
logical and legal. If the law on free industrial zones does not prohibit operating
trading companies, then they should
enjoy tax incentives as well, ” CEO at Hualing
In Soso Nibladze’s words, the Revenue
Service also says that the law on free
industrial zones is outdated and should be revised.
“We are holding consultations
with the Ministry of Finance in order to improve the current laws on Industrial Free Zones. In recent years, all free
industrial zones in Georgia have tried to attract trading companies and have spent
considerable resources for this purpose. A new infrastructure has been built,
warehouses are being built as well as customs procedures are being developed.
Now all this is complicated due to uncertainty, "- Soso Nibladze notes.
CEO at Poti Free
Industrial Zone David Ebralidze believes that the Revenue Service cannot demand
the payment of income tax from manufacturing companies, as this is clearly
spelled out in the current legislation. But recently, the Revenue Service is
considering the restoration of taxation for
“Everyone agrees that the law on free industrial zones
should be revised and amended, we are ready to consider this issue with all
interested departments, including the Ministry of Finance. We hope that in the
end a mutually acceptable decision will be reached, ” CEO at Poti FIZ concludes.