Business’ Attitudes Towards Tax System in Georgia

The study covered the following topics: Evaluation of the work of the Revenue Service (RS) of Georgia, the level of applying the services provided by it, tax-inspecting practices, and analysis of other key aspects of cooperation between the RS and businesses. A total of 1033 companies participated in the survey, which were divided into small, medium, and large enterprises. The companies were randomly selected from the list of companies registered in Georgia provided by the National Statistics Office of Georgia. This was done without any consideration of their location or their previous relations with tax inspection. The results of the research showed that the majority of companies were content with the work performed by the RS. The main problems that companies had were connected to issues of general importance, such as cutting of overall taxes, rather than to the work of the RS itself. A few cases reported problems with tax inspection, however, the nature of these problems could not be explored in-depth within the study. The study found that the attitude of all surveyed companies towards the work and services provided by the RS was mostly positive. However, the majority of the companies expressed their wish that the Tax Legislation be improved. Out of those surveyed, 80% would prefer that the Tax Code be simplified, and the number of taxes and their rates be decreased. More than half (55%) perceived the tax burden as average, but the companies that must pay value-added tax (VAT), profit, and import taxes perceived the taxes as heavy burdens. The services offered by the RS were evaluated positively, with the most popular services among the enterprises being the hot line, e-mail, and service center, as well as pre-declaration of goods in the customs clearance zones (CCZs) and customs clearance by text messaging. The rate of usage of remaining services was relatively low. The study also found that small and medium-sized individual entrepreneurs were less involved in the tax legislation changes and were less likely to participate in the tax legislation changing process. They were also less active in appealing the fines imposed on them and the tax legislation-related trainings and seminars were less available to their staff. The research was conducted by the Caucasus Research Resource Center (CRRC) upon the initiative of the USAID "Governing for Growth (G4G) in Georgia" project. Field work took place between September 21 and November 13, 2015. The survey was conducted through interviews and CAPI (Computer Assisted Personal Interviewing). Georgia is a country with a developing economy, and development of the private sector is one of the main objectives. The share of businesses engaged in industry is very low, and the majority of companies are engaged in trade and service provision. Despite the governmental strategy, the development of SMEs is still a problem. The majority of companies were content with the work performed by the RS, but the main problems that companies had were connected to issues of general importance, such as cutting of overall taxes. The study found that the attitude of all surveyed companies towards the work and services provided by the RS was mostly positive, but the majority of the companies expressed their wish that the Tax Legislation be improved.