Now private universities will be taxed too

The list of people who will have to pay additional taxes under the new code which will come into force from 2011 is increasing further. Kakha Baindurashvili, Minister of Finance of Georgia, has stated that private universities in Georgia have such significant incomes that they will have to pay VAT.

Kakha Bendukidze, the former Minister of Economic Development and founder of the Free University, told the media on June 21 that this initiative will cause an increase in education fees.

“The Government intends to raise more income by such methods, which will definitely decrease the accessibility of education in our country,” Bendukidze said. According to Bendukidze the changes in the Tax Code will affect music and sports academies too. “Liquidity has generally increased in our country but I don’t think this is absolutely the right step because we will need to decrease expenses this year,” he said, stressing the importance of considering this issue next year too.

Mikheil Chachkhunashvili, Executive Head of the Georgian Institute of Public Affairs (GIPA), told The Messsenger that he needed to study these changes in greater detail but confirmed that having to pay VAT would cause fee rises for students. Maia Mikashavidze, Dean of the Caucasus School of Journalism and Media Management, also found it difficult to comment on the issue but said, “VAT is an important mans of strengthening the budget but I doubt whether the private instituts have sufficient [financial] power for the introduction of VAT not to cause them any problems. I think the university rectors will have to discuss this,” Mikashavidze said.

Nana Samkharadze, Vice-President for Finance of the Caucasus University, said she was surprised at the possible changes in the tax code. “I can’t have a positive attitude to this because our university has already provided the National Examination Centre (NAEC) with the relevant information about our tuition. Fortunately the code hasn’t yet received legislative form and it won’t be adopted until January 2011, but the board of the Private Universities’ Association will discuss the subject before then,” Samkharadze said, stressing that the introduction of VAT will have a negative affect on the healthy competitive environment among private universities which has already made them very different from the state universities of Georgia.

Meanwhile Minister Baindurashvili has suggested establishing an agency to ensure the rights of taxpayers. A personal tax agent will henceforth help them fulfill their obligations and claim their rights under the tax code. The Minister explained that there will be a special article about the rights of customers in the code which will make it easier for them to understand the changes. A new principle of “loyalty” will also be established, under which if the taxpayer commits some code violation due to a technical problem or non-familiarity with an issue rather than as a result of wilful evasion the Council of Disputes will have the right to dismiss the chargs against them. The five-member Council of Disputes will be chaired by the Minister of Finance and will aim to create a stable and successful tax environment in the country.