The Essence of Tax Compliance Advisory
Tax compliance means the complete fulfilment of the obligations established by tax legislation — timely filing of declarations, correct computation of taxes and proper conduct of documents. The Tax Code of Georgia at the same time grants the taxpayer significant rights and imposes clear obligations, and knowing both directions prevents costs and disputed situations. This page explains the rights and obligations of the taxpayer and two special instruments — preliminary and public decisions — which determine the tax treatment of an operation in advance.
The Rights of the Taxpayer
The taxpayer has the right, in the manner established by law, to examine the information existing about him or her at the tax authority, to present his or her interests personally or through a representative, to use tax allowances and to recover or credit against future liabilities an amount of tax or sanction paid in excess. During tax control the taxpayer may request information about the ground for the control, submit a relevant explanation to the authority, attend a field tax audit conducted with respect to him or her and receive an original or certified copy of any related decision. The taxpayer may appeal an act or decision of the tax authority, decline to comply with an act or demand contrary to law and claim compensation for damage caused by an unlawful decision. The protection of the rights and lawful interests of the taxpayer is guaranteed through administrative proceedings and in court.
The Obligations of the Taxpayer
The taxpayer is obliged to fulfil tax obligations in the manner set by legislation, to register with the relevant tax authority, to submit declarations, reports and accounting documents and, during an audit, to present the documents needed for the computation and payment of taxes. A document necessary for determining the object of taxation must be kept for 3 years, counted from the end of the calendar year of the relevant tax period. A separate requirement concerns foreign bank accounts: a Georgian enterprise, organization and entrepreneur individual must notify the tax authority about the opening of a bank account outside Georgia within 5 working days of its opening — except term deposit accounts. In retail trade, a copy of the taxpayer certificate and price indicators must be displayed in a visible place for consumers.
The Preliminary Decision — Assessing an Operation in Advance
The Revenue Service, on the application of a person, is authorized to issue a preliminary decision on a planned or performed operation — on the rules of reporting and on the tax obligations to be fulfilled. The preliminary decision is issued no later than 90 days from the submission of the request, applies only to the person for whom it was issued and must cite the legal norm on which it rests. The decisive guarantee: where a person acts in accordance with the preliminary decision, it is inadmissible for a controlling authority to adopt a decision contrary to it and to charge a tax or a sanction. The preliminary decision is not applied if the facts indicated in it do not correspond to reality or if the norm on which it was based has been cancelled or amended. The information submitted in the request constitutes a tax secret, and a person who disagrees with the decision may appeal it.
The Public Decision — A Position Generalizing Practice
The Minister of Finance of Georgia is authorized to issue, on the basis of a dispute-resolution decision or an analysis of existing taxation practice, a public decision on the application of a norm of Georgian tax legislation. A public decision is published on the official website, applies indefinitely or for the term indicated in it and is binding on the tax authority from its entry into force. Where a person acts in accordance with it, a contrary decision and the charging of additional tax or a sanction are inadmissible. Where two public decisions, or a public and a preliminary decision, contradict each other, the person may act in accordance with either, at his or her own discretion — a real freedom of choice for the taxpayer.
Frequently Asked Questions
Below are answers to the questions raised most often about tax compliance.
How long must tax documents be kept?
A document necessary for determining the object of taxation — for 3 years, counted from the end of the calendar year of the relevant tax period.
When must I report the opening of a foreign bank account?
Within 5 working days of its opening; the requirement does not extend to term deposit accounts.
What is a preliminary decision?
The position of the Revenue Service on the taxation of your specific operation, issued no later than 90 days from the application and protecting the person who acts in accordance with it.
What freedom exists when decisions conflict?
Where two public decisions, or a public and a preliminary decision, conflict, the person chooses which one to follow.
How We Help on Legal.ge
The tax advisers of Legal.ge build your compliance on every level of the Code: we determine obligations and deadlines, prepare declarations, help with requesting a preliminary decision and applying public decisions, and represent you in disputed situations. Contact us — a preventive consultation is always far cheaper than a payable sanction.