Reforms at Georgia Revenue Service            Batumi, Georgia         22-24 September, 2011
Summary• Reforms in Tax and Customs Spheres• Electronic Tax Administration• E-Customs
• Georgian Business Sector’s expectations after Rose Revolution:   – Removing a daily threat of corruption   – Creating a ...
Reforms in Tax and Customs Spheres
Institutional Reforms                    Mediation and Dispute  Tax               Resolution Department                   ...
Business Climate: Low and Competitive Taxes• From 26 types of taxes in 2003 - to only 6 types of taxes in 2004            ...
Fair, Simple and Reliable Tax System• Personal Tax Agent• Advance Ruling• Tax Agreement• Special Tax Regimes – Micro and S...
Alternative Tax Audit       High                  Revenue Service        Risk     Companies                               ...
Mediation vs. Dispute Resolution           Out of 1200 complaints in 2011     Decision          January   February   March...
District Tax Officer - from Control to Partnership Bringing services totaxpayers Advising, informing andeducating taxpay...
Customs Reforms                TariffsBefore 2007                          After 2007   (16)12% 14% 15%16% 17% 18%        ...
Customs Reforms     Tariffs
Customs Reforms• Before 2005         • After 2009 import  import procedures     procedures  required:             require:...
Customs Reforms• Special VAT Regime• Golden List• Certificate of origin• Unified customs and revenue taxpayer files• Creat...
Electronic Tax Administration
Tax Returns Filing before 2009                                                                    For submission of   Taxp...
Electronic Filing after September ’09 Tax payer fills and     Electronic tax return is assigned the  sends electronic    ...
Electronic registration               SMS & E-mail                                                                        ...
Only 2% of Time• According to the Enterprise Surveys Georgia ranks  #1 in Eastern Europe and Central Asia
RESULTS: Minimize corruption risks         Ensure full performance monitoring
Businesses on the                                                                   Map Layers                            ...
New Approach                               Crypto                               Module                                    ...
E-Customs
ASYCUDA WorldRisk Criteria             Random Selection Module                                                         Red...
Risk Distribution      Import                 Export                           31%      18%                              1...
MinistrySimplification of Procedures                      of                   Internal         Single Window   Customs   ...
Before Creation of Customs Clearance Zones                                                         Examin     Warehous    ...
After Creation Customs Clearance Zones   Border Crossing Points                          CustomsIn case of standard proced...
Why Customs Clearance Zones? Clearing goods from office via www.rs.ge Reduces paper-related costsAdvanced review and pr...
Time line for documentary checksTime
Past                                      Today                                  Tomorrow                                 ...
Reforms are never enough . . .     Reforms go on . . .         www.rs.ge
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Reforms at Georgia Revenue Service

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Presentation held by Mrs. Lily Begiashvili, Deputy Head, Revenue Service of Georgia, within the Regional Workshop on Georgia's anti-corruption and public service delivery reforms (22-24 September 2011).

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Reforms at Georgia Revenue Service

  1. 1. Reforms at Georgia Revenue Service Batumi, Georgia 22-24 September, 2011
  2. 2. Summary• Reforms in Tax and Customs Spheres• Electronic Tax Administration• E-Customs
  3. 3. • Georgian Business Sector’s expectations after Rose Revolution: – Removing a daily threat of corruption – Creating a legal system that was predictable rather than arbitrary – Ensuring free, open and competitive economy • Reforming Georgia into the easiest and the most attractive place for doing business
  4. 4. Reforms in Tax and Customs Spheres
  5. 5. Institutional Reforms Mediation and Dispute Tax Resolution Department Customs Customs Tax Administr International Relations Administ ation Department rationTax Prevention Department Legal Department Economic Border 2007 Protection Department Administrative Department Audit Department IT Department Customs Clearance Department PR and Marketing Service Revenue Department Department Service HR DepartmentSince January 2011 – New and unified Tax and Customs Code
  6. 6. Business Climate: Low and Competitive Taxes• From 26 types of taxes in 2003 - to only 6 types of taxes in 2004 • Income Tax - 20% (by 2014 - 15%) • Corporate Tax – 15% • VAT - 18% • Property Tax - 1% • Import Tax - 0%; 5%; 12% • Excise Tax (differential)• State revenues increased by 80% in 2005‐2007
  7. 7. Fair, Simple and Reliable Tax System• Personal Tax Agent• Advance Ruling• Tax Agreement• Special Tax Regimes – Micro and Small Businesses• Good Faith Principle and Tax Ombudsman• RS Commission for Production Loses• Risk Based Audits
  8. 8. Alternative Tax Audit High Revenue Service Risk Companies Alternative Medium Risk Companies Audit Revenue ServiceLow Risk Companies
  9. 9. Mediation vs. Dispute Resolution Out of 1200 complaints in 2011 Decision January February March April August Refused 70% 75% 67% 65% 15%Partially decided in 18% 18% 23% 22% 10%favor of a company Fully decided in 11% 8% 10% 13% 75%favor of a company Trend 29% 26% 33% 35% 80%
  10. 10. District Tax Officer - from Control to Partnership Bringing services totaxpayers Advising, informing andeducating taxpayers
  11. 11. Customs Reforms TariffsBefore 2007 After 2007 (16)12% 14% 15%16% 17% 18% 12%20% 25% 30%5% 6% 7% 5% 8% 10% 4% 0% 0%
  12. 12. Customs Reforms Tariffs
  13. 13. Customs Reforms• Before 2005 • After 2009 import import procedures procedures required: require: 54 documents 4 documents
  14. 14. Customs Reforms• Special VAT Regime• Golden List• Certificate of origin• Unified customs and revenue taxpayer files• Creation of Customs Clearance Zones in Tbilisi, Batumi, and Poti
  15. 15. Electronic Tax Administration
  16. 16. Tax Returns Filing before 2009 For submission of Taxpayer brings filled tax returns to tax tax returns tax office or sends it via insured post payer was enforced to wait in long queues Tax inspector receives and certifies tax returns submission fact Submitted tax Tax return Correction of Data from Processed return is data mistakes in tax submitted returns aretransmitted to the manually returns causes declaration is transmitted information put in joint delayed reflected to the to the processing database calculation of personal card of Archive division tax liability tax payers
  17. 17. Electronic Filing after September ’09 Tax payer fills and  Electronic tax return is assigned the sends electronic reference number tax return via  Tax returns are electronically archived internet
  18. 18. Electronic registration SMS & E-mail Electronic filing Video Tax Code ApplicationsFrequently Electronic VAT InvoicesAskedQuestions Integrated TariffDataprotection Customs Clearance Zones Internet payments Business Environment Collection of Payments Acceleratedservices Mortgage/Arrest of Property Postal Parcels Appeals Declarations Tax Free Notifications Business Map
  19. 19. Only 2% of Time• According to the Enterprise Surveys Georgia ranks #1 in Eastern Europe and Central Asia
  20. 20. RESULTS: Minimize corruption risks Ensure full performance monitoring
  21. 21. Businesses on the Map Layers marked area Report 26.11.2010 Statistics Implemented measures - Details 36 Marked area Control purchases - Details 150016 km2 Population on the marked area 543 Chronometric checks -Details 3 Number of taxpayers 17 Stock-takings/Inventories - Details 2 RS Manager Bread production 4 Clothes shops Penalties -Details 5 5 Construction business 1 Sealings - Details Hotels 2 1 USER Restaurants 4 Examinations - Details 7 Financial serivces 1 Audit procedures - Details 2WWW.RS.GE
  22. 22. New Approach Crypto Module GSMRegistering Network Financial Means Server Tax Receipt with bar code Collecting Terminal Customer
  23. 23. E-Customs
  24. 24. ASYCUDA WorldRisk Criteria Random Selection Module Red channel (Physical inspection) Yellow channel (Documentary check) Green Channel (No prerelease check) ’’ASYCUDA” Automated System of Customs Data Blue Channel (post clearance audit)
  25. 25. Risk Distribution Import Export 31% 18% 10% 35% 1%42% 5% 56%
  26. 26. MinistrySimplification of Procedures of Internal Single Window Customs Affairs Ministry of Brokers Defense TRACKER 7Bonded Ministry MINISTRY OF DEFENCE E- MINISTRY OF ECONOMY ANDWareho SERVER DATA of uses Customs SUSTAINABLE DEVELOPMENT Health MINISTRY OF ENVIROMENT AND PROTECTION OF NATURAL RESOURCES License/ SERVICE AGENCY Permit OF THE MINISTRY OF Ministry INTERNAL AFFAIRS Railway of Justice REVENUE SERVICE Airlines
  27. 27. Before Creation of Customs Clearance Zones Examin Warehous Clearance ation e Broker Clearance Border Bank Service (in case Service Warehouse For Center of red (in case ofCrossing Warehous for Center e Payme Declaratio corrido red Point Release nt n r) corridor) of goods15 – 30 30 45 10-30 1 -2 10-30minutes minutes minutes minutes 30 minutes hour – 2–3 30 minutes minutes - hour hour days
  28. 28. After Creation Customs Clearance Zones Border Crossing Points CustomsIn case of standard procedures – in Clearance Zonesaverage 15 minutesIn case of red corridor – average 45 In case of standard procedures –minutes in average 15 minutesIn case of green corridor - average 5minutes (passport data registration In case of red corridor - up to 1control and customs procedures) hourAdvance Declaration CasePayment of Customs Clearance Fees and ImportDuties are postponed by 5 days
  29. 29. Why Customs Clearance Zones? Clearing goods from office via www.rs.ge Reduces paper-related costsAdvanced review and preparation of documents Translation of Invoices Collaborates securely with geographically dispersed clients Filling & Processing: - Land, Air, Sea and Railway declarations - 750 declarations a day (on average) Working hours: 24/7 Clearance Time: 15 minutes in averageTransportation of goods to the place of destination
  30. 30. Time line for documentary checksTime
  31. 31. Past Today Tomorrow Joint use of BCPs Risk management system 100 % control Risk profiles Random selection Turkey “Blind Control” Sarpi BCP in place Azerbaijan Proposal feed-backNo risk analysis or assessment Relevant Access to the database of Ukraine 1) Patrol Police Interexchange of advance information/agreement is signed 2) House of Justice8 Different agencies on the border • National Agency of • Notary Public • Civil Registry Chamber of Armenia Registry Georgia Negotiation process
  32. 32. Reforms are never enough . . . Reforms go on . . . www.rs.ge
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