CSO Wins the Court Case

Success of CHCA breeds hope

Charity Humanitarian Center “Abkhazeti” (CHCA) won a court case against the tax and revenue department of the Abkhazia government-in-exile and averting the danger of discontinuing of micro-finance program.

In November 2002, tax inspection of Abkhazia Autonomous Republic checked the records of CHCA and requested the payment of past due profit tax for the two last years, threatening to freeze the bank accounts of CHCA in case of non-compliance. CHCA appealed to the court stating the demand was illegal.

CHCA is a CSO established in 1995, striving for improvement of social and economical conditions of the internally displaced persons (IDPs) and other vulnerable groups. CHCA mainly implements the self-reliance programs, including business training, micro-financing and community development in Western Georgia, where the concentration of IDPs is the largest.

CHCA is supported by USAID and UNHCR, whose financial transactions are exempt from the profit tax according to the bilateral agreement of these agencies with the Georgian government. CHCA has, provided all the necessary documentation to the tax department proving tax release for international organizations; nevertheless as the head of CHCA, Archil Bakuradze, says “tax department does not will to recognize the superiority of international agreements over the national tax code”.

“We are in despair,” Archil Bakuradze told Advocacy.ge before the court hearing. “If the tax department obliges us to pay the debt for the two years, we will not be able to implement the program, leaving more than 1500 small entrepreneurs in difficult conditions.”
 
Bakuradze considers the tax inspection action may have been a sign of pressure at the civil society organization. This perception was re-enforced by the court hearings being delayed several times due to unclear “technical problems.”

However, on December 30, 2002 the court ruled in favor of CHCA. The decision cancelled the action of the tax inspection and forbids them to undertake any sanctions. Next court case  will discuss the issue of CHCA taxation. “We consider this was the most fair verdict court could reach” Archil Bakuradze says.
 
Members of other CSOs offered their support to CHCA. They say they are concerned with similar problems that are frequent and affect both national and international CSOs. We need clear legislation regarding the taxes and their exemption, for avoiding conflict with tax departments- CSO members state.

By Julie Giorgadze, CAP Information Officer