Government Hurries to Cancel Tax Arbitration Councils

The Parliament will discuss government-proposed amendments to the Tax Code at a session on April 20 envisaging the cancellation of the Tax Arbitration Councils, which are in charge of dealing with disputes between the tax-payers and the Finance Ministry.

The government decided to cancel these councils, a decision that is widely condemned by the business community, after the Finance Ministry lost a number of cases that resulted in the government re-paying several million Lari to a number of private firms.

?Currently there are several cases under consideration by the Arbitration Councils. The cases involve disputes over tens of millions of Lari. We should immediately take measures [against these councils], as we can not afford to re-pay tens of millions of Lari because of the unfair rulings of these councils,? Prime Minister Zurab Nogaideli told reporters on April 20.

According to the government?s proposal Tax Arbitration Councils will be again reintroduced only in 2008.

Tax Arbitration Councils were endorsed by the new Tax Code adopted by the Parliament last December. This initiative was described by then Economy Minister Kakha Bendukidze and the entire government, which was then chaired by late PM Zurab Zhvania, as a ?revolutionary idea for Georgia? and an expression of the government?s willingness to introduce a business-friendly Tax Code.

These Tax Arbitration Councils are composed of three members who are deal with specific disputes between the tax-payer and the authorities. One member of the council is appointed by the tax-payer, another by the Finance Ministry and the third member through an agreement by the aforementioned two. A new council is set up for each case.

The government?s decision to cancel these councils has already triggered harsh criticism from the business community. They say that in the conditions wherein the judiciary system of the country is under the government?s influence, the activities of the independent Tax Arbitration Councils are of vital importance for business.

The Parliament, which is dominated by the ruling National Movement party, intended to conduct discussions of these amendments to the Tax Code on April 22, but most of the legislators decided to hasten the approval of these amendments at the government?s request.

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