The Parliament reviewed the President"s motivated remarks on the Amendments to the Tax Code of Georgia during the plenary session and did not support them with 64 votes.

The President’s motivated remarks were presented to the Parliament by Giorgi Mskhiladze, the President’s Parliamentary Secretary. He stated that the President did not agree with the provision in the law adopted by the Parliament, which stipulates that the income received by a foreign enterprise registered in a low-tax jurisdiction and its partner individuals from transferring ownership rights on all assets (including shares) to a Georgian enterprise by January 1, 2028, is exempt from profit/income tax.

Additionally, under the law, the import of assets/goods into Georgia within the framework of this operation is exempt from import duties, and the Georgian enterprise is exempt from property tax on the received assets until January 1, 2030.

A necessary condition for benefiting from these tax incentives is that the same individual (or group of individuals) must own 100% of the shares/equity in both the foreign enterprise registered in the low-tax jurisdiction and the Georgian enterprise.

The President, in her motivated remarks, noted that the adopted law creates an unequal and discriminatory environment both for foreign investors and for investments made by local investors, as the new preferential regime does not apply to them.

The President’s Parliamentary Secretary noted that the President agrees with the part of the legislative changes which stipulates that tax arrears and accrued fines incurred by individuals before January 1, 2021, and still existing at the time of write-off, will be written off. This is reflected in the bill presented by the President.

Paata Kvizhinadze, Chairman of the Budget and Finance Committee, asserted that an innocuous law fell victim to political maneuvering due to the coincidence of the amendment to the Tax Code with the consideration of the Foreign Influence Transparency bill.

He further highlighted that the remarks put forward by the President’s Parliamentary Secretary lacked genuine motivation and were solely based on the viewpoints of purported field experts, whose identities remained undisclosed. Queries regarding this matter were left unanswered both within the committee and during the plenary session.

Paata Kvizhinadze also pointed out that during the initial discussion of the bill’s principles, no objections were raised by the opposition; it was only later, presumably upon receiving instructions, that they sought to connect the so-called offshore law with the foreign transparency law.

He clarified that the majority of offshore zones are established under Western jurisdiction and supervised by them, making it implausible for sanctioned Russian funds or illicit “black money” to originate from the West, as asserted by the opposition. Furthermore, he emphasized that the amendment exclusively pertains to offshore companies owning businesses in Georgia prior to the law’s enactment. Any benefits would not extend to businesses registered subsequent to the law’s passage.

Following the rejection of the President"s motivated remarks by the Parliament, MPs endorsed the original version of the law with 83 votes.