• BDO Tax & Legal Newsletter / November 2019 No.6
Newsletter:

BDO Tax & Legal Newsletter / November 2019 No.6

08 November 2019

Mariam Khuskivadze / Manager, TAX |

Amendment to the Law

According to the law N5129-Is (16 October 2019) following amendments came into tax code of Georgia:

Excise taxpayer

According to the amendment from 21 November an excise tax payer shall be a person who supplies the goods imported by himself listed under following codes of the National Commodity Classification of Foreign Economic Activities:

  • 2401 - raw tobacco, tobacco waste;
  • 2403 11 000 00 - pipe tobacco;
  • 2403 19 000 00  the rest of the smoking tobacco, which may contain tobacco substitutes of any proportion, excluding pipe tobacco;
  • 2403 91 000 00 - Homogenized or restored tobacco.

However, a person is considered to be an excise tax payer, only for this transaction and the taxable transaction moment is the moment the goods are supplied. And the declaration must be submitted no later than the 15th day of the month following the month of the operation.

By the amendment made into the article 185 of GTC it was defined that the amount of excise tax for raw tobacco and tobacco waste shall be determined by their weight.

However, Article 188 determines that excise tax rate for raw tobacco and tobacco waste, as well as for homogenized or recovered tobacco amounts to GEL 60 per kg.

Remark of the Article 188 (1) also has been changed. According to the edition being in force before the amendment pipe tobacco defined under code 2403 11 000 00 and the rest of the smoking tobacco, which may contain tobacco substitutes of any proportion, excluding pipe tobacco 2403 19 000 00 - was taxable only if it was packed in a primary packaging with the net weight of not more than 500 grams.

The amendment stipulated that the supply of the goods specified in the above codes (2401; 2403 11 000 00; 2403 19 000 00; 2403 91 000 00) is permissible only if it is packaged in the primary packages with the net weight of 50 or 100 grams, excluding the case when tobacco products are supplied for the purpose of manufacturing as specified by the order of the Minister of Finance of Georgia. However, the packaging of these goods in the primary packages is not the production of excise goods. Consequently, such type of tobacco shall be taxable   not only when selling of 500 gram packing is made but also selling of at least 50 gram of packing.

By the amendment the excise rate for non-filter cigarettes (20 pieces) specified under the code 2402 20 of the National Commodity Classification of Foreign Economic Activities has been increased. In particular if before the amendment this dual rate was composed as fixed rate plus 10% of the retail sale’s price, after the amendment the rate shall be as follows: fixed rate plus 30% of the retail sale’s price.

The law came into force from 21 November 2019.

Affixing goods with excise stamps

By the amendment made into the Article of excise stamps (article 192) it was defined that raw tobacco and tobacco waste, as well as liquids containing nicotine or without nicotine used for electronic cigarettes shall be subject to affixing excise stamps.

However, the importation of tobacco raw materials and waste products specified under the codes of the National Commodity Nomenclature 2401, 2403 11 000 00, 2403 19 000 00, 2403 91 000 00 and 3824 90 980 01 shall be exempt from affixing excise stamps.

The law came into force from 21 November 2019.

Import Tax

An amendment was also made into the article of the import tax, which stipulates that tobacco and any other substitutes of tobacco shall be subject to a 12% import tax rate irrespective of the quantity.

The law came into force from 21 November 2019.