TBILISI, Georgia – When Arshavir Asatryan, 48, opened his small sausage factory in Georgia’s capital Tbilisi he decided to name it “Forward Products”. But his business has not been moving forward for a year. Before last August’s war with Russia Before the war with Russia his monthly turnover was 30.000 GEL, now it is 10.000 GEL.
Before the August war the worldwide financial crisis hadn’t really affected the Georgian economy, but after the conflict it became clear that Georgia would not be able to avoid its affects. The downturn has hit small business particularly hard, so the government is trying to help them by cutting taxes.
“If before the war people bought 3 sausages a week, they now buy only one,” said Mr. Asatryan sitting at a table counting his profit for the day. He is watching Georgian President Mikheil Saakashvili give a speech on TV. “I hope he will do something,” said Mr. Asatryan.
In December 2004 the government passed a new Tax Code reducing tax rates and the number of taxes from 21 to 7. At the same time it increased penalties for non-payment of taxes.
“Small business is competitive itself if there is a good environment for development. The government is going to reduce income tax to 15% in 2011 and 2012. Till 2012 other types of taxes on personal profit will be non-existent and capital taxes will be abolished,” said Prime Minister Nika Gilauria at a meeting with students at the Georgian Institute of Public Affairs. He added the development of small businesses is a priority for the government.
According to the new tax code profit tax is unchanged at 20%, income tax reduced from 20% to 12%, social tax from 31 % to 20% and VAT from 20% to 18%. Enterprises that have less than 100,000 GEL turnovers pay only income and profit tax. Read the rest of this entry »
Posted by Arevik Badalyan 
