LAW OF GEORGIA TAX CODE OF GEORGIA SECTION I GENERAL PROVISIONS Chapter I - Georgian Tax System Article 1 - Scope of regulation In accordance with the Constitution of Georgia, this Code sets forth the general principles of formation and operation of the tax system of Georgia, governs the legal relations involved in the movement of passengers, goods and vehicles across the customs border of Georgia, determines the legal status of persons, tax payers and competent authorities involved in legal relations, determines the types of tax offences, the liability for violating the tax legislation of Georgia, the terms and conditions for appealing wrongful acts of competent authorities and of their officials, lays down procedures for settling tax disputes, and governs the legal relations connected with the fulfilment of tax liabilities. Law of Georgia No 5942 of 27 March 2012 - website, 12.4.2012 Article 2 - Tax legislation of Georgia 1. The tax legislation of Georgia comprises the Constitution of Georgia, international treaties and agreements, this Code and subordinate normative acts adopted in compliance with them. 2. The tax legislation of Georgia in effect at the moment when tax liability arises shall be used for taxation. 3. The Government of Georgia or the Minister for Finance of Georgia shall adopt/issue subordinate normative acts for enforcing this Code. 4. (Deleted - No 1886, 26.12.2013) 5. To enforce the tax legislation of Georgia, the head of the Legal Entity under Public Law (LEPL) within the Ministry for Finance of Georgia - the Revenue Service (‘the Revenue Service’) shall issue orders, internal instructions and guidelines on application of the tax legislation of Georgia by tax authorities. 6. When regulating tax matters, the terms and concepts of the legislation of Georgia used in this Code shall have the same meanings as they have in the respective legislation, unless otherwise provided for by this Code. 7. Any international tax-related treaty that has been ratified by the Parliament of Georgia and that has entered into force shall prevail over this Code. Law of Georgia No 1886 of 26 December 2013 - website, 30.12.2013 Article 3 - Setting timeframes 1. The timeframes set by this Code shall be determined by a specific calendar date or a period calculated in years, months or days and/or by reference to the appropriate circumstance. 2. The timeframe set by this Code shall commence on the day following the performance of the relevant action. A day may be a business day or a calendar day. If not specified, a day shall be a calendar day. Unless otherwise provided for by the tax legislation of Georgia, a business day shall coincide with a calendar day, except for a Saturday, Sunday and the holidays determined by the Organic Law of Georgia on the Labour Code of Georgia. 3. The timeframe calculated in years shall end in the respective month and day of the last year of the timeframe. 4. The time frame calculated in months shall end on the respective day of the last month of the timeframe. 5. An action for which a timeframe is set may be performed by the end of the last business day of the timeframe, and if the action is performed through a bank transfer, mail and/or electronic means, the action may be performed by 24:00 of the last day of the timeframe. 6. If the last day of the performance of the action coincides with a non-business day, the timeframe for the action shall be extended to the end of the next business day, and where the action is performed through a bank transfer, mail and/or electronic means, the action may be performed by 24:00 of the next business day. 7. A calendar year shall be the period from 1 January through 31 December of any year; for a newly registered taxpayer a calendar year shall be the period from the registration date through 31 December of the same year, unless otherwise provided for by this Code. 8. A year (other than a calendar year) is a period consisting of any consecutive 12 calendar months. http://www.matsne.gov.ge 20000000005001016012 Law of Georgia No 1886 of 26 December 2013 - website, 30.12.2013 Article 4 – Period of limitation 1. The period of limitation for assessing taxes to a taxpayer and for submitting a notice of tax liability to the taxpayer shall be three years, unless otherwise provided for by this Code. 2. The period referred to in the first paragraph of this article shall commence from the end of the calendar year in which the respective tax liability arose. 3. The period of limitation for imposing sanctions (other than a penalty) under this Code on a taxpayer and for submitting a relevant tax notice to a taxpayer shall be three years, unless otherwise provided for by this Code. 4. The period referred to in the third paragraph of this article shall commence: a) from the end of the calendar year in which the tax offence was committed, except as provided for by subparagraph (b) of this paragraph; b) from the end of the calendar year in which the tax liability arose, if the calculation of the amount of the sanction provided for in this Code is related to the amount of the tax liability. 5. The period of limitation for a tax audit of taxpayers shall be three years, unless otherwise provided for by this Code. 6. The period referred to in the fifth paragraph of this article shall commence from the end of the calendar year in which the audit takes place. 7. The period of limitation referred to in the first, third and fifth paragraphs of this article shall be extended for one year if less than a year remains before the expiry of the period and the taxpayer has filed with a tax authority a taxpayer’s claim or a tax return (including an adjusted tax return) for the relevant period. 8. The period of limitation for a taxpayer to file a taxpayer claim with a tax authority shall be three years, commencing from the end of the calendar year in which the right to obtain a refund for any overpaid tax and/or sanction arose. 9. The period of limitation for serving an individual administrative-legal act on tax enforcement measures as provided for in this Code to a taxpayer, registration authority or banking institution shall be three years, commencing from the end of the calendar year in which the tax arrears were incurred. 10. In the cases provided for in the ninth paragraph of this article, the period of limitation for serving an individual administrative-legal act shall be suspended: a) from the moment of entry into force of a court decision on admitting a person’s application for insolvency, or on initiating bankruptcy proceedings, or from the moment of entry into force of a court decision/ruling on rehabilitation up to the end of the relevant regime; b) during the period of restructuring a person’s tax arrears in accordance with the procedure laid down by the Law of Georgia on Restructuring Tax Arrears and State Loans; c) during a tax dispute. 11. The periods of limitation under this article shall not apply where court/dispute review body decisions are enforced by a tax authority. Law of Georgia No 1886 of 26 December 2013 - website, 30.12.2013 Law of Georgia No 3583 of 1 May 2015 - website, 15.5.2015 Article 5 - Principles of the tax legislation of Georgia 1. A person shall pay national and local taxes established under this Code. 2. No tax obligation introduced in violation of this Code or not provided for in this Code may be imposed on a person. No person may be forced to pay taxes earlier than required by this Code. 3. Local self-government representative authorities may introduce only the local taxes provided for in this Code. Article 6 - Concept and types of taxes 1. A tax is a mandatory, unconditional monetary payment to the budget made by a taxpayer in accordance with this Code, based on the necessary, non- equivalent and gratuitous character of the payment. 2. Taxes shall be national and local. 3. National taxes shall be the taxes provided for under this Code, the payment of which is mandatory across the whole territory of Georgia. 4. Local taxes shall be the taxes provided for under this Code, introduced by normative acts of local self-government representative authorities (within http://www.matsne.gov.ge 20000000005001016012 marginal rates), the payment of which is mandatory within the territory of the relevant self-governing unit. 5. National taxes shall be: a) income tax b) profit tax c) value added tax (VAT) d) excise tax e) import duty 6. A property tax shall be a local tax. Article 7 – Introducing and imposing local taxes; changing conditions for their payment; abolishing local taxes 1. A local self-government representative authority may introduce a local tax imposed under this Code as a flat rate tax across the whole territory of the local self-governing unit and/or according to individual industries and/or types of businesses within the territory of the unit, within the marginal rates set by this Code. 2. Local self-government representative authorities shall forward information on the introduction of a local tax, on changing the payment conditions or on the abolishing the local tax and a copy of the relevant normative act to the Revenue Service of Georgia and to relevant tax authorities upon the publication of the normative act. Law of Georgia No 189 of 28 December 2012 - website, 29.12.2012 Chapter II - Terms and Concepts Used in This Code Article 8 - Definition of terms 1.