Significant changes were made to the Tax Code from January 5, 2021. The changes are due to the pandemic situation in the world and the social projects that the Georgian government is implementing to overcome the economic crisis.

Under the changes, due to the current situation, dispute resolution bodies have been given the right to review tax complaints remotely, using technical means, which will help to maintain distance and minimize contacts.

In addition to the above, significant changes have been made in terms of tax breaks. Tax breaks covered income tax as well as VAT, property and import taxes.

Extended the period of exemption from salary and income tax paid to the employee up to 750 GEL for an additional period of 6 months, namely, from December 1, 2020 to 6 months - until May 31, 2021. The employer is entitled to reduce Income tax if the salary received by this employee from the same employer during 1 calendar month does not exceed 1500 GEL.

However, this tax benefit does not apply to:

•         Budget organization;

•         National Bank of Georgia;

•         National Regulatory Authority;

•         An enterprise in which the state or municipality owns more than 50% of the shares, as well as an enterprise established / subsidiary of this type of enterprise, if this enterprise owns more than 50% of the shares / stakes of the enterprise / subsidiary established by it.

Tax exemption was imposed on those operating in the field of hotel / temporary accommodation. The benefit means that the Minister of Finance / Head of the Revenue Service of Georgia has the right to extend the payment period of income tax to be paid in November and December 2020 no later than July 1, 2021, if the hotel / temporary accommodation is located in one of the following locations:

•         Bakuriani, Borjomi Municipality;

•         Gudauri village of Kazbegi municipality;

•         Goderdzi resort located in Khulo municipality;

•         Mestia, a small town in Mestia Municipality.

However, in this case, the taxpayer will not be charged interest for non-payment of tax.

The change also affected Value Added Tax (VAT), in particular, the taxpayer is entitled to lease VAT on lease / lease services rendered during 6 calendar months (reporting period) from December 1, 2020 during the reporting period of actual payment of the compensation amount / part of this service.

Another tax benefit is that property used in the declaration of 2021 is exempt from property tax on property used in the following activities:

• Hotels and similar accommodation facilities;

• Leisure and other short-term accommodation facilities;

• Restaurants and mobile food service activities;

• Beverage service activities;

• Travel agencies, tour operators and other booking services and related activities.

This tax exemption also applies to property transferred by lease, leasing or other such form, if this property is used in any of the activities specified in the same part.

In addition, the person who carries out any of the above activities is also entitled to reduce (not include in the budget) the already deferred income tax (income tax for which the term specified in the Tax Code is extended).