General Procedure of Consideration a Tax Dispute

FROM THE REDACTION

Article 145. According to the Georgian Tax Code from January 1, 2005, breach of obligations envisaged by the Tax Code on the part of tax authority or a tax payer/tax agent or some other responsible person gives grounds opening a tax dispute.

Formal grounds for opening a tax dispute:
Refusal to fulfill “tax payer demand” of the tax authority envisaged by Article 81 of the Tax Code and presentation of corresponding written response or its non-presentation in time;
Presentation by the tax authority of the “tax demand”, envisaged by Article 80 of the Tax Code, to a tax payer/tax agent or some other responsible person.
If there are formal grounds for opening a tax dispute, a tax payer/tax agent or some other responsible person has the right to appeal against the point at issue according to the established rule and choose of the forms of settling this dispute: (Article 146)
a) Settling of the dispute by means of consideration in the system of the Finance Ministry of Georgia;
b) Settling of the dispute by arbitration;
c) Settling of the dispute by the court.
The first form (by means of consideration in the system of the Finance Ministry) of settling a dispute includes three stages: settling of the dispute in the tax authority; settling of the dispute in the Tax Department of the Finance Ministry of Georgia, and settling of the dispute in the Council for settling of disputes under the Finance Ministry of Georgia (hereinafter Council).
If a tax payer/tax agent or some other responsible person has chosen to settle the dispute by means of applying to the system of the Finance Ministry of Georgia he, at any stage, has the right to appeal against the taken decision in the court or arbitration according to the order envisaged by law within the period of time that he has for appeal in the system of the Finance Ministry.
A tax payer/tax agent or some other responsible person should notify the tax authority concerning choosing the form of settling of the tax dispute: with indication to the “tax payer demand” envisaged by the Tax Code; b) with indication of the presented response in accordance with Article 149 of the Code in reply to the “tax demand”; by written notice if he is going to open a dispute in the court or in the arbitration in reply to the “tax demand”.
A tax payer/tax agent or some other responsible person has the right to change the form of settling the dispute in his response or written notice.
Article 147.
If the tax authority refuses fulfillment of “tax payer demand”, it is obliged within 15 calendar days from the day of receiving the “tax payer demand”, to demand from the presenting person to send a written response in accordance with the order envisaged by Article 146 of the Tax Code. If response is not sent in time, it will be considered as refusal the “tax payer demand”.
If a tax payer/tax agent or other responsible person refuses to fulfill the “tax demand”, he is obliged, within 15 calendar days from the moment of receiving the “tax demand”, to send a written response to the tax authority according to the order envisaged by Article 44 of the Code if he chooses to apply to the system of the Georgian Finance Ministry for settling the dispute, or a written notice if he has chosen to settle the dispute in the court or arbitration.
All the evidence on which the response is based should be enclosed with it.
Correspondingly, all the pages of the response should be numbered and at the end of the response, before the signature, the number of the filled in pages should be indicated in words.
The party of the dispute should sign all the pages of the response.
According to this article of the Tax Code, as the date of starting of the dispute is considered the date of sending of the response by the tax authority to a tax payer/tax agent or some other responsible person, in accordance with the first part of this article;
the date of sending by a tax payer/tax agent or some other responsible persons of the response or notice to the tax authority, in accordance with the second part of this article.
Non-fulfillment of the established will be considered as recognition of the “tax demand” by the tax payer/tax agent or some other responsible persons and it will be liable to fulfillment.
According to Article 148 of Georgian Tax Code, obligation of payment of the disputed sum and the duties added on to it, as well as of the corresponding fine is considered as suspended from the day of starting of the tax dispute till the end of it, though adding on of the duties to it continues.
Article 149 deals with the content of the response and notice of a tax payer/tax agent or some other responsible persons. In particular, in response of a tax payer/tax agent or some other responsible persons there must be mentioned the name of the tax authority and its address, personality of a tax payer/tax agent or some other responsible persons, tax payer’s identification number, his address and contact means; the date of receiving of the “tax demand” and the subject of the demand; legal and factual grounds for refusal to fulfill the “tax demand”; the list of evidence that should be enclosed with the response; the form of settling the dispute in case of its continuation.
If arbitration is chosen as the form of settling the tax dispute, the name of arbitration and its address should be additionally indicated in the response.
Presentation of a response without indication of a form of dispute settling and arbitration’s name and address (if arbitration is chosen as a form of settling the tax dispute) is equal to non-presentation of a response.
The following should be indicated in the written notice: the name of the tax authority and its address; personality of a tax payer/tax agent or some other responsible person, identification number of a tax payer, address and contact means; the date of receiving the “tax demand” and its subject; the form of settling the dispute (court or arbitration).
Fulfillment and provision of the “tax demand” is given in Article 150 in which it is indicated that a tax payer/tax agent or some other responsible person, in case of appealing against the “tax demand” are obliged, within 15 calendar days from the moment of receiving the “tax demand”, to present to the tax authority a bank guarantee, or/and a certificate about putting a corresponding sum on a deposit account, or/and financial risks insurance policy or/and his property for securing tax guarantee/mortgage. The total cost of presented guarantees should not be less than disputed tax indebtedness of a tax payer. The cost of the property presented for securing tax guarantee/mortgage is established by an authorized person of the tax authority, after which he sends the guarantee/mortgage agreement to the public list-register for registration. The public list-register is obliged to carry out registration of this right not later than two days after receiving of the notice.
If a tax payer/tax agent or some other responsible person does not present to the tax authority the securing guarantees within the period of time indicated in the first part of this article, the tax authority has the right to take the following measures on implementation of the “tax demand” without a court decision: to sequestrate his bank accounts; to sequestrate any kind of his property (including his movable, immovable and non-material property);
If the tax dispute is settled in favor of a tax payer/tax agent or some other responsible person the securing guarantees leveled at him will be cancelled, sequestration made by the tax authority will be considered as lifted, and the guarantee/mortgage right as annulled. But if the tax dispute is not settled in favor of a tax payer/tax agent or some other responsible person, then he will have to pay the disputed tax from the date of presentation of the disputed tax demand as well as the corresponding tax sanctions.
The response of the tax authority is signed by the head of the tax authority or his deputy. (Article 151)
The rights of a tax payer/tax agent or some other responsible person after receiving of the tax authority’s response or non-receiving of it within the indicated period of time are given in Article 152 of the chapter devoted to tax disputes, in which it is indicated that within the period of 5 days after receiving the tax authority’s response or non-receiving of it within the period of time indicated in the first part of Article 147 of this Code, within 5 days after expiration of this term, a tax payer/tax agent or some other responsible person has the right to continue the dispute in the form indicated in the “tax payer demand”.
In case of continuation of the dispute, a tax payer/tax agent or some other responsible person is obliged to inform the tax authority about it within the period of time during which he has the right to continue the dispute.
Non-continuation of the tax dispute within the period of time indicated in Article 152 is considered as renunciation of the dispute.