On Amnesty and Legalisation of Undeclared Tax Liabilities and Property

On Amnesty and Legalisation of Undeclared Tax Liabilities and Property

Law of Georgia

On Amnesty and Legalisation of Undeclared Tax Liabilities and Property

Article 1.🔗

Purpose of the Law

1. The purpose of this Law is, proceeding from the principle of humanism, in the form of a special and temporary measure of a one-time nature:

a) release from criminal liability and punishment of persons who have committed a crime in the entrepreneurial and economic sphere;

b) determination of the conditions and procedure for the legalisation of such income (property) for the purpose of identifying and recognising undeclared tax obligations and property, and establishment of the grounds for release from criminal liability for its settlement.

2. The operation of this Law shall not extend to:

a) persons who have accumulated income (property) by such criminal means as: illegal trafficking in drugs and arms, terrorism, trafficking and other transnational crimes;

b) officials as defined by Article 2 of the Law of Georgia on Conflict of Interest and Corruption in Public Service, including members of the National Security Council and the High Council of Justice (except members of other advisory bodies of the President of Georgia and persons equated with officials as defined by Article 2 of the Law of Georgia on Conflict of Interest and Corruption in Public Service), as well as heads and deputy heads of a Legal Entity of Public Law as defined by paragraph 47 of Article 44 of the Criminal Procedure Code of Georgia, persons who, from 17 October 1997, held managerial and/or representative authority in an enterprise whose charter capital exceeds (exceeded) GEL 1 million and in which the State directly or indirectly holds (held) 50% or more of the share (shares), and close relatives, family members and related persons as defined by paragraphs 21, 21¹ and 21² of the same Article.

3. The operation of the Law of Georgia on Facilitating the Suppression of the Legalisation of Illegal Income, as well as of the legislation of Georgia on the confiscation and transfer to the State of illegal and unjustified property, shall not extend to persons provided for by subparagraph „b“ of paragraph 2 of this Article (except state-political officials) in the event of their investment of unjustified property or funds in enterprises and organisations of Georgia from 1 January 2004 to 1 January 2006 – within the amount of that investment, as well as the placement of a deposit in resident commercial banks of Georgia in accordance with the procedure established by subparagraph „b“ of paragraph 2 of Article 5 of this Law.

4. The amnesty provided for by this Law shall extend to officials provided for by subparagraph „b“ of paragraph 2 of this Article (as well as their family members, close relatives and related persons) only in respect of acts committed by them before acquiring the status of an official.

Article 2. Definition of terms used in this Law🔗

The terms used in this Law have the following meaning:

a) tax obligation – a monetary obligation before the State which, within the time limits and in accordance with the procedure established by the tax and customs legislation of Georgia and the Law of Georgia “On the Georgian Road Fund”, is subject to declaration and/or payment;

b) concealed property (income) – property (income) received in ownership or use by the persons provided for by paragraphs 1 and 3 of Article 4 of this Law as a result of the commission of the crimes provided for by Articles 192, 193, 194, 195, 196, paragraphs 1 and 2 of Article 197, Articles 199, 200, 201, 204, 209, 210, 211, 213, 216, 218, 219, 220, 221, paragraphs 1 and 2 of Article 214 and, in connection with these paragraphs, by subparagraph “a” of paragraph 5 of Article 214, as well as by paragraph 1 of Article 79, Articles 160, 160¹, 160², paragraphs 1 and 2 of Article 162, Articles 163, 163¹, 164, 165, 165¹, 165³, 165⁴, 165⁵, 165⁶, 166, 166¹, 167, 169³, 169⁶, 169⁷, 171¹, 172, 173, 173¹, 173² and 174 of the Criminal Code of Georgia of 30 December 1960 (Bulletin of the Supreme Council of the Georgian SSR, 1961, No. 1, Art. 10);

c) investment – an asset or right as defined by Article 1 of the Law of Georgia “On Promotion of Investment Activity and Guarantees”.

Article 3. Rule of application of amnesty🔗

1. Upon entry into force of this Law:

a) proceedings shall be terminated in all investigative bodies in respect of the persons against whom cases have been initiated and cases pending before courts, who committed before 1 January 2004 the crimes provided for by Articles 192, 193, 194, 195, 196, the first and second paragraphs of Article 197, Articles 199, 200, 201, 204, 209, 210, 211, 213, the first and second paragraphs of Article 214 and, in connection with these paragraphs, by subparagraph "a" of the fifth paragraph of Article 214, Articles 216, 218, 219, 220, 221, as well as by the first paragraph of Article 79, Articles 160, 160¹, 160², the first and second paragraphs of Article 162, Articles 163, 163¹, 164, 165, 165¹, 165³, 165⁴, 165⁵, 165⁶, 166, 166¹, 167, 169³, 169⁶, 169⁷, 171¹, 172, 173, 173¹, 173² and 174 of the Criminal Code of Georgia of 30 December 1960 (Bulletins of the Supreme Council of the Georgian SSR, 1961, No. 1, Art. 10);

b) the persons who at the time of entry into force of this Law are convicted for the commission of the crimes provided for by subparagraph "a" of the first paragraph of this Article shall be released from punishment.

2. Persons released from punishment on the basis of this Article shall have their criminal record expunged in accordance with the procedure established by legislation.

3. The operation of this Article shall extend to the natural persons who committed the crimes provided for by subparagraph "a" of the first paragraph of this Article before 1 January 2004.

4. The operation of subparagraph "b" of the first paragraph of this Article shall not extend to a fine imposed as a basic or additional punishment.

Article 4. Rule of legalization of undeclared tax obligations🔗

1. Upon entry into force of this Law, the tax and customs obligations arising before 1 January 2004 and unfulfilled by resident and non-resident natural and legal persons of Georgia shall be deemed fulfilled, and no criminal prosecution, administrative or other type of proceedings provided for by legislation shall be carried out against them.

2. The operation of this Article shall extend to the taxpayers defined by the Tax Code of Georgia and other legislative acts, as well as to tax agents, who before 1 January 2004 did not declare and/or pay tax obligations.

3. The operation of this Article shall not extend to:

a) tax and customs obligations declared, assessed and recorded in the relevant state bodies in accordance with the procedure established by legislation, but unpaid;

b) amounts of tax recorded as overpaid into the budget as a result of non-commodity operations or a fictitious transaction. The said amounts shall be subject to unconditional annulment.

4. The supervisory bodies provided for by the legislation of Georgia (including tax and customs bodies), as well as law enforcement bodies, shall be prohibited from carrying out in any form a revision (control, study, verification) in connection with the payments defined by the first and second paragraphs of this Article.

Article 5. Rule for declaration-legalization of concealed property (income)🔗

1. Legalization of a person's property status shall be carried out by the persons provided for by this Law, in accordance with the procedure established by the same Law, by declaring the property status and by payment of a one-time payment in the amount of 1% of the market value of the concealed property (income). Legalization of concealed financial funds is also possible in accordance with the procedure established by this Law and within the established timeframes, by placing them in Georgian banks without payment of the 1% payment. The 1% payment shall be paid on declared monetary funds and on immovable property of non-economic purpose.

2. A person is entitled to:

a) submit to the tax authorities, from the entry into force of this Law until the end of 2005, a declaration reflecting his/her own property status and a receipt of payment of the one-time payment in the amount of 1% of the market value of the declared concealed property (income);

b) within the 3-month period determined by the Government of Georgia in the period from the entry into force of this Law until 31 December 2005, deposit monetary funds in resident commercial banks of Georgia in term or savings deposits in national or foreign currency by depositing cash, or by transferring his/her own money from abroad.

3. The property declaration provided for by this Article shall reflect the property and financial status of the person as of the moment of filling in the declaration, including concealed property (income). The data entered in the declaration constitutes confidential information and is subject to the requirements established by the Tax Code of Georgia on the protection of data secrecy regarding taxpayers.

4. The tax authority shall, immediately upon submission of the declaration and the receipt of payment of the 1% payment, register them, return to the declarant certified copies of the declaration and the receipt, and immediately issue the relevant certificate.

5. Upon legalization of a person's property status:

a) certification of a copy of the declaration (receipt), registration of the declaration (receipt) and the relevant certificate issued as a result thereof constitute the basis and supporting document for the legalization of the property status declared by a natural person, including concealed property (income);

b) placement of financial funds in resident commercial banks of Georgia in accordance with the procedure established by this Law and within the established timeframes, and the relevant bank document issued as a result thereof, constitute the basis and supporting document for the legalization of the financial funds placed by the person in the bank.

6. As of the day of entry into force of this Law, without payment of the one-time tax, the following shall be considered legalized in accordance with the procedure established by this Law:

a) immovable property registered before 1992, as well as immovable property acquired (built) in 1992-2004, the market value of which does not exceed 300,000 GEL;

b) financial funds of natural persons placed in deposits (accounts) in Georgian banking institutions as of the day of entry into force of this Law.

7. Any unfulfilled obligations related to legalized property, provided for by the tax and customs legislation of Georgia and by the Law of Georgia “On the Georgian Road Fund”, shall be deemed fulfilled as of 1 January 2004.

8. The controlling and law enforcement bodies provided for by the legislation of Georgia shall be prohibited from conducting, in any form, a revision (control, study, verification) of the property status legalized in accordance with this Law, including concealed property (income).

9. The form of the property status declaration, the mandatory data to be entered therein, the form of registration of the declaration and of the respective certificate and the procedure for its issuance, the procedure for payment of the 1% payable, the list of tax bodies with which the declaration may be filed, as well as the 3-month period provided for by subparagraph “b” of paragraph 2 of Article 5 of this Law shall be determined by a normative act by the Government of Georgia in agreement with the Finance and Budget Committee of the Parliament of Georgia.

Article 6. Transitional provisions🔗

1. Officials of the respective state institutions shall, on the basis of a written request of the persons provided for by this Law, within 3 days of the request, destroy or return to the declarant the declarations and the general inspection plan of the same persons submitted before the entry into force of this Law and existing (kept) in the respective institutions. The declarant shall also have the right to destroy the respective tax documentation in his possession.

2. Within 15 days of the entry into force of this Law, the Government of Georgia shall ensure the issuance of the normative acts provided for by paragraph 9 of Article 5 of this Law.

Article 7. Final provision🔗

This Law shall enter into force upon publication.

President of Georgia M. Saakashvili

Tbilisi,

24 December 2004.

No. 821 rs