Tax Incentives will Apply to Banks

Tax Incentives will Apply to Banks

access_time2016-02-17 17:10:14

The income tax reform will also apply to banks, although it will not happen this year - Giorgi Kvirikashvili,  the Prime Minister of Georgia,  states.


It is assumed that the law which exempts the business from paying income tax in case of reinvestment, will be enacted  for banks approximately in 2 years.


According to the Prime Minister, the government considered untimely the enactment  of this provision in relation to banks this year.


According to "TBC Bank"  CEO Vakhtang Butskhrikidze, currently  the issue is under discussion.


"Perhaps the banking sector and the government will come to a more optimistic scenario that would be acceptable for both sides. We believe  that the law should come into  force in relation to  the  banks in 2 years. We are working on this, and will likely come to some mutually acceptable solution, "- says  the banker.


In the words of  the CEO of "VTB-Georgia" Archil Kontselidze, it is unclear why the changes in the tax laws do not apply to the financial sector, while the state support is equally necessary and important for all sectors of the economy.


At this stage,  the tax reform recognized revolutionary  by the  business does not apply to banks, insurance companies and microfinance institutions.


Nodar Khaduri,  the Georgian Minister of Finance,  says that  this is due to the fact that these sectors are successful  enough and they do not need support from the state.


However,  representatives of  "Society and Banks" NGO believe if the benefits apply to the banks, they will be able to reduce interest rates on loans that will bring benefit to all.


According to the organization’s experts ,  the Government’s view  that banks and insurance companies do not need support is  wrong.


"Banks are the engine of the economy, and the growth of money availability will be useful  not only for  the banks, but also for  customers ,  both legal and private entities. Since there is a rather high level of competition among Georgian banks, they will try to attract customers by offering lower interest rates, which will be real in the case of increasing the availability of capital and reducing dependence on deposits, "- say in the organization.


At the same time, the NGO  believes that the immediate enactment of  the new law for the financial sector would put the government in a very difficult position.


 "The budget will lose GEL 400 million per year if the current version of the reform is carried out  and the government will have to seek funding from other sources. Of course, these losses will be reimbursed by  grown  economy, but this requires  time. In the event if  the benefits affect the financial sector, the losses  will grow to GEL 1 billion, and it will be much harder  for the government to reimburse the amount in the medium term.  The reform may affect the financial sector after some time, and it certainly will contribute to the growth of the economy, "- believe in the organization.



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