FROM THE REDACTION
A New Epoch of Cash registers and a New Puzzle for business (amendments to the Tax Code) I n accordance with Georgian law ?2547 dated December 27, 2005 “On Use of Cash Registers in Implementation of Money Settlements with Customers”, the Georgian law dated August 26, 200 “On Use of Cash Registers in Implementation of Money Settlements with Customers” (“Georgia’s Legislative Bulletin”, ?29, 18.09.2003, Article 206) was recognized as invalid.
At the same time, the “Law on Introduction of Amendments and Addenda in Georgia’s Tax Code” was adopted, according to which tax authorities, within the framework of their competence, are obliged to make a public list of and register the models of cash registers using of which is authorized in money settlements with the population, as well as control protection of the rules related to using of cash registers and fully register tax payers’ sums liable to payment. In accordance with Chapter 12, Article 97 of Georgian Tax Code, all persons implementing economic activities that are engaged in supplying of goods/services to customers by cash payment are obliged to use cash registers except for the cases when the sum is paid in accordance with tax invoices written out for them for covering the cost of the goods/services. Any activity that is implemented for obtaining a profit, income or compensation, regardless of the results of such activity, is considered as economic activity if this article does not envisage otherwise. Economic activities may include both entrepreneurial and non-entrepreneurial activities. Entrepreneurial activities are determined by Georgian “Law on Entrepreneurs”. The following refers to nonentrepreneurial activities: working for hire; placing of monetary means in banks and other credit institutions; letting of property, except for the cases envisaged by Article 1 , Part 4; property management by proxy; independent implementation by a natural person of activities envisaged by Article 1, Paragraph 2 of Georgian “Law on Entrepreneurs”. The following is not referred to economic activities: > activities of state and local government bodies that are directly related to their implementation of functions envisaged for them by the law, except for rendering paid services on contract basis and other entrepreneurial activities; > charitable activities; religious activities. Released from using cash registers are persons in the part of money settlement when a strict registration document envisaged by the Georgian legislation is used to certify the fact of cash payment; . natural persons that do not use hired persons’ labor and sell agricultural produce obtained from family farming or (processed) products made of it – belong with this part of activities; . entrepreneurial natural persons – with the part of activities envisaged in Article 168, Subparagraph L of Part I; . natural persons implementing economic activities that are not obliged to be registered with tax authority as entrepreneurial natural persons; . persons that supply goods/services and receive cash on consumer’s territory (at homes, organizations, enterprises) – belong with this part of activities on conditions that they issue a document equal to a receipt; . persons that supply goods/services and receive cash by automatized or mechanic means – belong with this part of activities; . entrepreneurial natural persons that implement petty retail trade in the form of street peddling, sell newspapers and magazines at installed stands and tables in the street – belong with this part of activities. Persons that are obliged to use cash registers should observe the rules of using cash registers envisaged by Georgian legislation. They are also obliged to issue a cash register receipt to a customer for the supplied goods/ services (except for the case when, in accordance with the order established by the Georgian Finance Minister, a document equal to receipt is issued) that certifies the fact of paying cash for a corresponding operation related to goods/services supply. In accordance with this law, with the purpose of protection of consumers’ rights, the price of goods/services to be sold by persons implementing economic activities should be indicated in the national currency only, and price lists must be prominently displayed. After rendering of services a customer should require a receipt. Cash registers must be in Georgian language, with fiscal memory, included in the register, technically operable, registered with the tax authority in accordance with the corresponding order and sealed up. In accordance with the law (Article 1 9), breaking of the rules of using cash registers in cash settlements with customers entails special fines Persons that notified the tax authority concerning the damage to a cash register not later than on the second working day after the moment of establishing the damage are released from the fine envisaged in Article 7, which is indicated in the table. A person is obliged to suspend cash settlement in supplying goods/services to customers till eradication of the cash register’s malfunctioning. The issue concerning responsibility is made almost clear by Article 1 9 of this law, however, it still leaves some problems for entrepreneurs. In particular, till eradication of the cash register’s malfunctioning (which, judging by practical experience, often takes more than one or two days) a person has no right to carry out economic activities, which may inflict losses in the amount of several hundred GEL and even more. Securing of special mechanisms for protection of cash registers is also necessary, without which an intentional damage of seal may take place, which will entail a fine in the amount of from 3 to 15 thousand GEL and will have a negative effect on the entrepreneur’s profits. Article 14 of the Georgian Tax Code envisages issues related to responsibility for transportation and non-registration of goods purchased or supplied for economic activity without documents. In particular, the first part of this article says that in case of transportation of purchased or supplied goods for economic activity (except for primary (prior to industrial processing – prior to changing of commodity code) agricultural produce) without an invoice, and in case of transportation of exported from other countries goods without customs documents envisaged by the customs legislation, a tax payer will have to pay a fine in the amount of, respectively , the invoice cost or the cost of the imported goods in market prices without VAT. It is also pointed out here that Finance Ministry’s bodies are entitled to sequestrate the goods that are transported this way and lodge them with a corresponding person till paying of the fine or till taking a decision on non-fining. This part of the law is very vague and ambiguous since it contains no advantages for entrepreneurs. It is not clear what is store for the goods in the same conditions if they are transferred within the territory of one country, though the purpose of law is that there should not be anything ambiguous in it and all positions should be distinctly determined in it. Secondly, it is not at all clear what kind of goods and what cases non-payment of fines is applied to, if their transportation took place without necessary documents. Paragraphs 5 and 6 of the same article are completely incomprehensible and are formulated in an unqualified way. It is necessary to establish at what stage the shortage of inventory holdings was revealed, since at different stages their appraisal takes place in accordance with different prices. It is pointed out at the end of Article 14 that for the current period before the law dated December 27, 2005 becomes effective, the sanction envisaged in Part 2 of Article 14 of the Georgian Tax Code will not be applied to tax payers. That is if in process of transportation an invoice was filled in not completely, the sanction is not applied to payers, but those tax payers that did not have goods stock-taking and displacement register before this law became effective or corresponding information was not indicated in the register, in view of which a sanction was applied tom them by tax authorities based on Part 2 of Article 14 of the Tax Code, the sanction was lifted from the part of goods for which there is a customs declaration, tax invoice, or invoice, or which is indicated in the primary documents, though the sum paid by a tax payer to the budget will be returned in accordance with the order envisaged by Article 71 of the Code. Everything seems to be clear as to the mentioned part. But what should be done with the part of the goods from which, in accordance with this article, sanctions will not be lifted and more than 45 have passed since economic operations? The answer is simple: 1. Such goods have already been sold and there is no point it this article; 2. If such goods still exist, they are not marked off in the law. Responsibility for breaking the rules of using cash registers in cash settlements with customers