The Investors Council Secretariat of Georgia, established by the EBRD and the Government of Georgia, published a study prepared by PwC that includes strategies for economic recovery.
According to the study, income tax will have the most positive effect on economic growth.
As of today, all employees of Georgia pay 20% of their salary in the form of income. If this figure is reduced to 15%, the country's economic growth is expected to accelerate by 1.7%, while a reduction to 12% will increase it by 2.7%.
Giorgi Cherkezishvili, Head of Investors Council Secretariat of Georgia explains, that this is recommendatory study and the authors of the research have created an economic model that shows what impact tax change can have on economic growth and budget revenues.
"We wanted to show how this or that model works. This part of the study is not a recommendation. If this was a recommendation, it would also present how the budget deficit can be filled. These are test results, which simply showed us the results of this or that tax change,” said Giorgi Cherkezishvili.
Is the survey a precondition that the Georgian government intends to revise its taxes? The Investors Council says that these are only economic scenarios, but they do not know about the government's plans. The Minister of Economy Natia Turnava declared that there was no need to reduce taxes.
Cherkezishvili explains that their goal is to find ways to improve the investment climate in the country and attract foreign direct investments.
"In the post-pandemic period, investors’ attitude towards different countries has changed. Research shows that policies need to be changed to attract investments. The survey has inquired 100 investors who have no contact with Georgia and examine their approaches, what factors they pay attention to before making a decision to enter the country. Qualified workforce was identified as one of the criteria and the focus was on the education system. The second issue was the business environment, the importance of logistics and infrastructure, which also included access to the internet and digitalization of services, "- said George Cherkezishvili.
