Alleged Wrongdoing Sparks Controversy over Financial Police

Georgian Public Defender Sozar Subari and Executive Secretary of the Federation of Georgian Businessmen Giorgi Isakadze condemned the current practice of taxing importers at customs offices located along the country’s eastern border as “illegal.”

Subari said that customs officers are taxing imported goods not in accordance of the value of goods, as envisaged by the law, but by their volume. The accusations are strongly denied by the customs service.
 
“Importers have to pay 1,000 GEL [USD 555] for 1 cubic meter of imported cargo, which is a clear violation of the law,” the public defender said at a news briefing on August 15. 
 
The Customs Department has dismissed these accusations as groundless. “This accusation [taxation of imported goods according to their volume] is not true. This is not envisaged by the current law,” said Spokesperson for the Customs Department Kakha Chibashvili to Civil Georgia.
 
He explained that if an importer fails to provide the necessary papers or if these documents are false, which “happens very often, since the document often underestimates the value of imported goods,” customs officers invite an independent expert, who determines the market price of the goods at the scene.

According to the law, customs dues on imported cargo amount to 34% of the total cost plus transportation expenses.  
 
Public Defender Sozar Subari said that in private conversations the customs officers say that they act on the verbal orders of Financial Police chief Davit Kezerashvili. “Though no one officially confirms this,” he added.
 
“As importers say, customs officers and experts who assess the value of imported goods are under pressure from Financial Police officials,” Sozar Subari said.
 
Davit Narmania of the Tbilisi-based non-governmental organization Georgian Young Economists Association (GYEA), monitors issues related to customs services. He says that this kind of taxation in practice is illegal, since there are no legal documents providing for such taxation treatment.  

“The current practice at the customs offices might be the result of the spontaneous, disorganized activities of the customs officers and Financial Police officials. I do not think that this practice is motivated by an attempt to collect more revenues in the budget. This would be a rather shortsighted policy,” Narmania told Civil Georgia, adding that according to GYEA’s monitoring, the state budget currently faces no serious threat of lack of revenues.

“If the practice continues over a long-term period it will lead to decreased import cargoes and subsequently, we will have to deal with a serious problem,” Narmania said.

At a news conference on August 15, Giorgi Isakadze, Executive Secretary of the Federation of Georgian Businessmen – a business lobby group – said that the current situation at the customs offices hinders the development of an attractive investment climate in the country. 

The Financial Police, which was set up last year, is charged with fighting against smuggling and other economic crimes. Since then this body, as well as its chief Davit Kezerashvili have become the subjects of severe criticism for several times. Some opponents say that in some cases the Financial Police is used as “a vehicle of state racketeering.” However, the authorities claim that the Financial Police have contributed largely to the increase of state budget revenues through its effective fight against smuggling.