President of Georgia Salome Zourabichvili has vetoed the so-called Offshore Law and returned the amendments to the Tax Code to parliament with motivated remarks.
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On April 19, the Parliament adopted the so-called Offshore Law in the third reading with 73 votes against 9. This adoption means that it will be possible to bring property and profits from offshore zones to Georgia without paying taxes.
The opposition contends that the Offshore Law is tailored to the interests of Bidzina Ivanishvili, the honorary chairman of the ruling party Georgian Dream, and is connected with the increased expectation of its annulment.
- Under the new law, tax benefits will be granted to all companies registered in an offshore country that transfer their assets to Georgia by January 1, 2028. Such companies will be exempt from profit/income tax.
- Additionally, bringing any asset into Georgia will be exempt from import tax, and the Georgian enterprise will be exempt from property tax until January 1, 2030, in connection with the asset received within the framework of this operation.
A necessary condition for the use of tax benefits is that the same individual (or group of persons) owns 100% of the shares in both the offshore registered foreign enterprise and the Georgian enterprise.
In the 2021 study by Transparency International Georgia, it was found that Bidzina Ivanishvili owned 20 offshore companies. At the time of the study's publication, 12 of these 20 offshore companies owned only 26 companies in Georgia, which in turn owned other companies. As a result,
Bidzina Ivanishvili's 12 offshore companies directly or indirectly owned 70 companies in Georgia.
Offshore companies are often attractive to individuals with assets of dubious origin. According to Transparency International Georgia, Russian businessmen and oligarchs frequently utilize offshore companies. With the current legislative change, they will be permitted to transfer their assets to Georgia with tax benefits.
The majority of the full parliament composition, at least 76 deputies, can override the president's veto, which is not a problem for Georgian Dream.
