Statistical Office to study the shadow-economy sectors

Statistical Office to study the shadow-economy sectors

access_time2020-01-21 16:00:34

The National Statistical Office is set to study shadow education and real estate sectors.

These are the areas - tutoring and rental apartments-  which are not only controlled by the state, but there is no relevant data. The statistical service will study these  sectors to set the number of the market participants and its volumes.

The figures are expected to  be impressive while the shadow economy makes 13% of Georgia’s entire economy.

 According to the statistics expert Ioseb Archvadze, despite the private tuition industry is booming, its scale has already begun to decline. 

 “The first reason for this is the decline in demand for higher education. If earlier enrollees wanted to get to the university, now only 0, 8 applicants are for one place at the university. But this does not mean that tutoring as a profession disappears. According to experts, people spend about  GEL 25-30 million on tutors per year, education costs are much higher and reach GEL  400-500 million. Apart from that, budgetary funding for education is also growing - in 2019, it amounted to GEL 1.4 billion , in 2020 it is planned to increase to GEL 1.5 billion, ”the expert notes.

According to the law, tutors must pay income tax, but due to the lack of accounting, the budget does not receive anything from this type of activity. However, even if it is completely transparent, this activity will not bring big dividends to the state - about GEL 6-7 million per year. The taxation of tutors can only be considered as a precedent for strengthening fiscal discipline and a way of improving a tax culture.

“At this stage, taxation of tutors is not the goal of the National Statistical Office but obtaining objective information about the situation in this sector,” Ioseb Archvadze says.

There is practically no data about another large shadow-economy sector - rental apartments.  

“Annually, up to 35,000 apartments worth $ 1.6 billion are sold in Tbilisi. According to official figures, the housing rental market is worth up to $ 100 million per year, despite in the developed countries sales and rental figures are practically the same. In Georgia the figures are different because this sector is almost fully shaded, ”the expert explains.

In Archvadze’s words, the tax administration of rental apartments is complicated by local specifics - in developed countries neighbors inform the authorities when an apartment is rented, while in Georgia this is not accepted.


“If  this business is  legalized, the cost of renting apartments will increase significantly, ” Ioseph Archvadze points out.


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