BDO Tax & Legal Newsletter / JUNE 2021 No.3
Mariam Khuskivadze / Manager, TAX
Amendment to the Order
Unqualified status VAT payer
On 29 April 2021 the order №13617 "On Restriction of the right of taxpayers to issue/receive tax invoices and tax documents in certain cases” was issued by the Head of Revenue Service (RS). This new order replaced and repealed RS’s previous order (№107 15.02.2021) "On granting a special status to VAT payer".
According to the new order, the status of Unqualified VAT payer is granted to:
- Person first registered as a VAT payer, who from the moment of registration as a VAT payer is considered as an unqualified VAT payer
- Qualified VAT payer who does not have a transaction on the taxpayer's personal registration card during any 12 consecutive calendar months. In this case the transaction according to which the amount on taxpayer's personal registration card equals to 0 is not taken into account.
It was additionally clarified that the status of an unqualified VAT payer is granted to a person who:
- Does not possess an active current bank account according to RS’s information (this statement is valid from 1 May 2021).
- Has the status of a qualified VAT payer and acknowledges tax arrears as defined by tax authority.
According to the order:
- In the case of assigning the status of an Unqualified VAT payer to a person registered as a VAT payer, for the period of validity of this status, a limitation is applied, which implies the deprivation of the right to both issue and confirm tax invoices (as well as Oil Special Tax Invoice and Tax Document)
- The decision or refusal to grant the status of a Qualified VAT payer to an Unqualified VAT payer is made by the authorized person of a tax body (including in case of an application by an interested person), in accordance with the rules established by the Head of RS.
The order additionally clarifies that for a specific reporting period or an issue, audited or charged for by tax authority, restriction on the issuance of a tax invoice/tax document shall be implemented on the portal. In such circumstances the tax invoice/tax document can be issued electronically only through applying by taxpayer to RS and presenting relevant arguments as to why restriction is requested to be lifted. The application will be processed by the Audit Department and the taxpayer will be allowed to file the relevant tax invoice/tax document within 3 working days after making the appropriate decision.
The amendment came into force from 22 May 2021.
Fees for the use of natural resources
The RS approved a methodological reference for calculation of the fee for the use of natural resources on 18 May 2021.
Methodical reference determines the rule for defining taxpayer's tax liability in the cases where:
- The licensee has alienated the licence to extract minerals during the reporting year
- The licensee has adjusted the appropriate plan for exploitation of mineral resources during the reporting year (indicating the annual amount to be exploited)
- The person is exempt from obtaining a licence to extract minerals by the decree of the Government of Georgia on the exemption from the mineral extraction license
- There is no approved plan for exploitation (indicating the annual amount to be exploited) of mineral resources.
Initiative of the Government of Georgia
In May 2021 an initiative of the Government of Georgia was published, according to which a taxpayer who has recognized or unrecognized tax arrears arisen as of 17 May of the current year, is entitled by the decision of the Government of Georgia to fully reduce the assessed fines by paying the principal amount.
In order to take advantage of this benefit, the taxpayer must apply to the Revenue Service before 1 August of the current year with a request to conclude a tax agreement. The amount specified in the tax agreement must be paid to the budget by 31 December 2021.
Herewith, reduction of sanctions shall only be realized when stipulated by full payment of the principal amount, unless the principal amount is less than 30% of the total tax arrears (the sum of the principal amount and the sum of sanctions), in this case the taxpayer is required to pay at least 30% of the total tax arrears. The government initiative will apply to all taxpayers, including those engaged in tax disputes within the Ministry of Finance and the court system.
Applications for tax agreement can be submitted through the RS - www.rs.ge. Approvals will be granted automatically.