## PREFACE — IMF TADAT Assessment of the Georgia Revenue Service (_cr16283)

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---

### Assessment overview, mission, and purpose
- Assessment requested by Mr. Giorgi Tabuashvili, First Deputy Minister of Finance and Director General (DG) of the Georgia Revenue Service (GRS).
- Assessment undertaken using the Tax Administration Diagnostic Assessment Tool (TADAT) during the period of May 25–June 9, 2016; final version reviewed in IMF HQ and by the TADAT Secretariat.
- IMF team: Ms. Lucilla McLaughlin (Mission Chief), Messrs. Vincent de Paul Koukpaizan (both Fiscal Affairs Department), Gary Andrews, and Graham Harrison (both IMF external experts).
- Assessment funded by the IMF administered Tax Policy and Administration Topical Trust Fund.
- Purpose: establish a baseline of tax administration performance to determine reform priorities and, with subsequent repeat assessments, highlight reform achievements.

### High-level executive findings
- Overall view: GRS is making good progress in implementing modern tax administration practices with particularly innovative use of new technology.
- Major systemic gap: absence of an effective GRS‑wide management information and reporting system for senior management.
- Some international good practices in place (e.g., taxpayer services and dispute resolution); risk management in progress; VAT refund processing has fundamental design and operational weaknesses.

### Identified main strengths
- Extensive use of modern information technology (taxpayer portal, e-filing, e-payment, tablets for district tax officers).
- Good taxpayer service record (call center, service centers, ‘Privé’ tax advisor program).
- Willingness to embrace innovation.
- Effective advance payment system.
- Emerging focus on compliance risk assessment and management.
- Good engagement with taxpayers (public rulings, open door days, student education program).
- Simplified systems for small taxpayers.
- Accessible and independent dispute resolution mechanism.

### Identified main weaknesses
- Organization-wide weaknesses in operational planning and performance monitoring.
- Lack of control of the tax register.
- Low filing compliance rates with inadequate follow-up of nonfilers.
- Serious flaws in the design and operation of the VAT refund system with accumulation of unpaid VAT credits.
- Very restricted access to bank account data.
- Large and growing stock of old and uncollectible arrears.
- No focus on institutional risks; no business continuity plan.
- General failure to evaluate impact of initiatives (satisfaction surveys, audit impact).

---

### TADAT framework, scoring, and assessment intent
- TADAT structure: 9 performance outcome areas (POAs) and 27 high level indicators; 47 measurement dimensions inform indicator scores.
- Scoring scale: four‑point ‘ABCD’ scale where ‘A’ = meets or exceeds international good practice; ‘D’ = inadequate or insufficient information.
- Assessment intent: establish a performance baseline to inform reform objectives, priorities, sequencing, and to monitor progress over the next two–five years.

---

### Major quantitative findings and key statistics

### Macroeconomic and fiscal context
- Real GDP growth: 2.8 percent in 2015; expected 3.4 percent in 2016; around 5 percent in 2017.
- Inflation: at 5 percent or lower since 2012.
- Current account deficit: 11.7 percent of GDP in 2015.
- 2014 nominal GDP: GEL 29.2 billion (US$16.1 billion).
- Per capita GDP: US$3,676.20 (2014).

### Tax system and revenue shares
- Tax-to-GDP: 25.2 percent for 2015 (including 0.2 percent customs tax collections).
- Contributions to GDP by tax type (as presented): PIT: 7 percent; VAT: 11 percent.
- Number of taxpayers (2015): CIT 108,926; PIT 261,639; PAYE (employers) 119,259; VAT 72,220.
- Total tax revenue collections (Millions local currency): 2013 6,659; 2014 7,242; 2015 8,011.
- Selected tax collection lines (Millions local currency, 2015): CIT 1,025; PIT 2,223; VAT—gross domestic collections 1,868; VAT—collected on imports 1,638; VAT—refunds -123.
- Nominal GDP in local currency: 2013 26,847.4; 2014 29,150.5; 2015 31,691.6.

### Taxpayer register and administration
- GRS staff: 3,426 employees (including 1,472 in Customs).
- GRS organizational note: DG assisted by three DDGs managing 12 departments; GRS is a legal entity within the Ministry of Finance (MoF).
- Register maintenance: sub-register for VAT and electronic file developed; a 2015 cleansing exercise removed almost 500,000 duplicated, once‑off, or defunct registrations.
- Register limitations: relies on NAPR; does not record filing/payment obligations for CIT, PIT, or PAYE; NAPR amendments require taxpayer request and fee.

### On-time filing and electronic use (2015)
- On-time filing rates (2015): CIT 70 percent; PIT 54 percent; VAT 62 percent; PAYE withholding 57 percent.
- Large taxpayers on-time filing: CIT and VAT large taxpayers > 90 percent (e.g., CIT large taxpayers 93 percent; VAT large taxpayers 94 percent).
- Electronic filing: more than 99 percent of declarations filed electronically for each core tax (CIT 100 percent in 2015; PIT 99.94 percent; VAT ≈100 percent; PIT withholding ≈100 percent).
- Electronic payments: all core taxes paid electronically (100 percent across number and value reported for 2013–2015).

### Payments timeliness and arrears (2015)
- VAT on-time payment rates (2015): by number 87 percent; by value 91 percent (235,579 on‑time of 270,001 due; value on‑time 1,956 of 2,144 million GEL).
- Total accumulated arrears at end‑2015: exceeded GEL 5.8 billion.
- Breakdown at end‑2015: Principal GEL 1,925; Sanctions and Interest GEL 3,921.
- Of total arrears: Collectible estimated GEL 553; Uncollectible presented as GEL 5,293.
- Arrears indicators: around 90 percent of total arrears are more than 12 months old; GRS estimate of collectible arrears at end‑2015: GEL 555 million (around 7 percent of total arrears as noted elsewhere).

### VAT refunds (2015)
- VAT refund claims received: Number 380; Value GEL 183,231,102.09.
- VAT refunds paid: Number 153; Value GEL 127,577,685.19.
- Paid outside 30 days: Number 53; Value GEL 77,055,620.37.
- Refund claims declined: Number 227; Value GEL 55,653,416.90 (all declined within 30 days).
- Large stock of unclaimed excess VAT credits: GEL 1,087 million as at end‑2015.
- Less than 400 refund claims in 2015 from a registered active taxpayer base of 72,000; around 60 percent of refund claims were declined in 2015.

### Call center and taxpayer service metrics (May 2015–April 2016)
- 12‑month total calls: 161,582; answered within six minutes: 159,414; 98.60 percent answered within six minutes.
- Call center capacity: can accommodate a maximum of 60 callers at a time; peak overload not captured in answered‑within‑six‑minutes metric.

---

### Performance outcome area (POA) scores and key assessment findings

### POA 1 — Integrity of the Registered Taxpayer Base
- P1-1 Accurate and reliable taxpayer information — D (P1-1-1 M1 D D; P1-1-2 C).
- P1-2 Knowledge of potential taxpayer base — C (M1 C).
- Key findings:
  - Register does not record core taxpayer obligations (except VAT) and lacks sector segmentation.
  - GRS does not control registration; NAPR responsibility limits GRS use of register for management.
  - 2015 cleansing improved reliability as of December 31, 2015, but ongoing maintenance is not a priority.
  - Detection of unregistered businesses: almost 1,200 detections in first four months of 2016; registration requires taxpayer consent via NAPR so compulsory registration absent.

### POA 2 — Effective Risk Management
- P2-3 Identification, assessment, ranking, and quantification of compliance risks — C (M1 C C).
- P2-4 Mitigation of risks via compliance improvement plan — C (M1 C).
- P2-5 Monitoring and evaluation of mitigation activities — C (M1 C).
- P2-6 Institutional risk management — D (M1 D).
- Key findings:
  - Risk analysis developmental; TRMD developing CRM approach and published Compliance Strategy 2015–16.
  - About 50 individual compliance risks identified.
  - Lack of bank account data access limits risk analysis.
  - Simple compliance improvement plans exist but progress not regularly monitored.
  - No evidence of institutional risk assessment; no business continuity plan; staff not trained in disaster recovery.

### POA 3 — Supporting Voluntary Compliance
- P3-7 Scope, currency, accessibility of information — B (M1 A B; other dimensions B/A).
- P3-8 Initiatives to reduce compliance costs — B (M1 B).
- P3-9 Obtaining taxpayer feedback — C (P3-9-1 C; P3-9-2 A).
- Key findings:
  - Wide range of information channels: website, taxpayer portal, service centers, inbound call center, district tax officers, Privé program, advance rulings (fee GEL 10,000), open door days, schools program.
  - Simplified arrangements for micro businesses (annual income < GEL 30,000) and small businesses (annual income < GEL 100,000).
  - Pre‑filling of declarations not undertaken.
  - Limited systematic collection and use of taxpayer feedback; some targeted consultation (Coordination Council, form design).

### POA 4 — Timely Filing of Tax Declarations
- P4-10 On-time filing rate — C (individual tax scores C).
- P4-11 Use of electronic filing facilities — A.
- Key findings:
  - On-time filing rates low for core taxes (CIT 70 percent; PIT 54 percent; VAT 62 percent; PAYE 57 percent).
  - More than 99 percent of declarations filed electronically.

### POA 5 — Timely Payment of Taxes
- P5-12 Use of electronic payment methods — A.
- P5-13 Use of efficient collection systems — B.
- P5-14 Timeliness of payments — B (VAT proxy: number B, value A).
- P5-15 Stock and flow of tax arrears — D+ (overall poor indicators).
- Key findings:
  - All core taxes paid electronically.
  - Effective withholding and advance payment systems, but third‑party reporting not optimized; banks not required automatic reporting.
  - Total accumulated arrears end‑2015 exceeded GEL 5.8 billion; about two‑thirds of arrears (GEL 3.9 billion) are accrued interest and penalties.

### POA 6 — Accurate Reporting in Declarations
- P6-16 Scope of verification actions — C.
- P6-17 Proactive initiatives to encourage accurate reporting — B.
- P6-18 Monitoring extent of inaccurate reporting — D.
- Key findings:
  - Audit program: about 1,000 field audits and 2,500 desk audits annually; almost 400 auditors.
  - Audit selection centrally from risk‑ranked quarterly lists.
  - Auditors’ access to bank account data requires taxpayer consent or court order.
  - Public rulings (over 400 case studies) support accurate reporting; no cooperative compliance arrangements with large taxpayers.
  - No monitoring or analysis of revenue losses from inaccurate reporting; no tax gap studies.

### POA 7 — Effective Tax Dispute Resolution
- P7-19 Independent and graduated dispute resolution — A.
- P7-20 Time taken to resolve disputes — C.
- P7-21 Degree to which dispute outcomes are acted upon — C.
- Key findings:
  - Graduated mechanism (GRS council, MoF council, judicial levels); administrative review independent and documented.
  - Statutory time limit 65 days; 45 percent resolved within 30 days; cumulative 86 percent within 60 days.
  - Monitoring of dispute outcomes exists but not systematic; limited feedback into policy/administration.

### POA 8 — Efficient Revenue Management
- P8-22 Contribution to government revenue forecasting — C.
- P8-23 Adequacy of tax revenue accounting system — C.
- P8-24 Adequacy of tax refund processing — D.
- Key findings:
  - Information processing division (11 staff) monitors collections and provides basic analytical input; capability limited for sophisticated modeling.
  - Automated revenue accounting provides essential functionality but lacks evidence of a full system‑based audit.
  - VAT refund system lacks risk‑based assessment; large stock of excess credits (GEL 1,087 million); low claim volume; 60 percent of claims declined in 2015.

### POA 9 — Accountability and Transparency
- P9-25 Internal assurance mechanisms — D+ (internal audit) / D (staff integrity).
- P9-26 External oversight — C.
- P9-27 Public perception of integrity — C.
- P9-28 Publication of activities, results, and plans — D+ (timeliness) / C (future directions).
- Key findings:
  - No dedicated internal audit within GRS; MoF internal audit staff seven (one qualified); limited IT audit capacity.
  - Staff integrity assurance fragmented; no GRS code of ethics (work paused pending public service‑wide code due 2017); no ethics training delivered.
  - SAO conducts annual financial and compliance audit; no program to audit operational performance.
  - Public perception studies exist but are not frequent; IFC (2012) and USAID G4G Deloitte (May 10, 2016) surveyed firms.

---

### Identified reform priorities and implications (as reflected in assessment)
- Establish effective GRS‑wide management information and reporting for senior management to monitor key operations and strategic initiatives.
- Strengthen taxpayer register control and ongoing register maintenance (beyond episodic cleansing).
- Improve filing enforcement and follow‑up on nonfilers to raise on‑time filing rates.
- Redesign VAT refund processing to a risk‑based approach to protect VAT integrity and reduce stock of excess credits.
- Secure regular access to bank account information or alternative third‑party financial reporting to enhance risk analysis and audit effectiveness.
- Develop institutional risk management including business continuity planning and disaster recovery training.
- Implement systematic monitoring and evaluation frameworks for compliance mitigation activities and taxpayer feedback.
- Accelerate internal audit capacity, IT systems audit capability, and coherent staff integrity frameworks.

*Source: IMF TADAT assessment PREFACE and related chapter excerpts from _cr16283 (May 25–June 9, 2016) — final version reviewed in IMF HQ and by the TADAT Secretariat.*

### PREFACE ................................................................................................................

### PREFACE

### Document structure and major sections
- PREFACE ............................................................................................................................6
- EXECUTIVE SUMMARY .................................................................................................7
- I. INTRODUCTION ..........................................................................................................12
- II. COUNTRY BACKGROUND INFORMATION .........................................................13
  - A. Country Profile ..................................................................................................13
  - B. Data Tables ........................................................................................................13
  - C. Economic Situation ...........................................................................................14
  - D. Main Taxes ........................................................................................................14
  - E. Institutional Framework ....................................................................................15
  - F. International Information Exchange ..................................................................15
- III. ASSESSMENT OF PERFORMANCE OUTCOME AREAS ....................................15
  - A. POA 1: Integrity of the Registered Taxpayer Base ...........................................15
  - B. POA 2: Effective Risk Management .................................................................18
  - C. POA 3: Supporting Voluntary Compliance ......................................................21
  - D. POA 4: Timely Filing of Tax Declarations .......................................................26
  - E. POA 5: Timely Payment of Taxes .....................................................................28
  - F. POA 6: Accurate Reporting in Declarations .....................................................31
  - G. POA 7: Effective Tax Dispute Resolution ........................................................34
  - H. POA 8: Efficient Revenue Management ...........................................................37
  - I. POA 9: Accountability and Transparency ..........................................................40

### Tables (listed in source)
- 1. Summary of TADAT Performance Assessment ..............................................................8
- 2. P1-1 Assessment ............................................................................................................16
- 3. P1-2 Assessment ............................................................................................................17
- 4. P2-3 Assessment ............................................................................................................19
- 5. P2-4 Assessment ............................................................................................................20
- 6. P2-5 Assessment ............................................................................................................20
- 7. P2-6 Assessment ............................................................................................................21
- 8. P3-7 Assessment ............................................................................................................22
- 9. P3-8 Assessment ............................................................................................................24
- 10. P3-9 Assessment ..........................................................................................................25
- 11. P4-10 Assessment ........................................................................................................27
- 12. P4-11 Assessment ........................................................................................................27
- 13. P5-12 Assessment ........................................................................................................28
- 14. P5-13 Assessment ........................................................................................................29
- 15. P5-14 Assessment ........................................................................................................29
- 16. P5-15 Assessment .....................................................................................................30
- 17. P6-16 Assessment ........................................................................................................32
- 18. P6-17 Assessment ........................................................................................................33
- 19. P6-18 Assessment ........................................................................................................34
- 20. P7-19 Assessment ........................................................................................................35
- 21. P7-20 Assessment ........................................................................................................36
- 22. P7-21 Assessment ........................................................................................................36
- 23. P8-22 Assessment ........................................................................................................37
- 24. P8-23 Assessment ........................................................................................................38
- 25. P8-24 Assessment ........................................................................................................39
- 26. P9-25 Assessment ........................................................................................................40
- 27. P9-26 Assessment ........................................................................................................41
- 28. P9-27 Assessment ........................................................................................................43
- 29. P9-28 Assessment ........................................................................................................43

### Figures and attachments
- Figure
  - 1. Distribution of Performance Scores ...............................................................................11
- Attachments
  - I. TADAT Framework .......................................................................................................45
  - II. Country Snapshot ..........................................................................................................47
  - III. Data Tables ..................................................................................................................48
  - IV. Organizational Chart ....................................................................................................60
  - V. Sources of Evidence ......................................................................................................61

### Abbreviations and acronyms (as listed)
- CIT                   Corporate                   income                   tax                   
- CRM                 Compliance                 risk                 management                 
- DG                    Director                    General                                        
- DDG Deputy Director General 
- GEL                  Georgian                  Lari                                    
- GRS Georgia Revenue Service  
- G4G Governing for Growth in Georgia 
- HQ                    Headquarters                    
- IA                     Internal                     audit                     
- ID                     National                     identity                     number                     
- IT                      Information                      technology                      
- IFC International Finance Corporation 
- LTO Large taxpayer office 
- MoF Ministry of Finance 
- NAPR National Agency for Public Registry  
- PAYE               Pay-as-you-earn               
- PIT                   Personal                   income                   tax                   
- POA Performance outcome area 
- PFM Public financial management 
- SAO                 State                 Audit                 Office                 
- SSC Social security contribution 
- TAD Tax Administration Department 
- TADAT Tax Administration Diagnostic Assessment Tool 
- TRMD Tax Risk Management Division 
- USAID United States Agency for International Development 
- VAT                 Value-added                 tax                 

*Preface and table of contents from the source PDF.*

### PREFACE

### PREFACE

### Assessment overview and purpose
- Assessment requested by Mr. Giorgi Tabuashvili, First Deputy Minister of Finance and Director General (DG) of the Georgia Revenue Service (GRS).
- Assessment undertaken using the Tax Administration Diagnostic Assessment Tool (TADAT) during the period of May 25–June 9, 2016.
- Purpose: establish a baseline of tax administration performance to determine reform priorities and, with subsequent repeat assessments, highlight reform achievements.

### Mission composition and funding
- IMF team: Ms. Lucilla McLaughlin (Mission Chief), Messrs. Vincent de Paul Koukpaizan (both Fiscal Affairs Department), Gary Andrews, and Graham Harrison (both IMF external experts).
- Assessment funded by the IMF administered Tax Policy and Administration Topical Trust Fund.

### Engagement with authorities and review process
- The team met with Mr. Tabuashvili and Deputy Directors General (DDGs) Messrs. Vakhtang Lashkaradze, Irakli Shartava, and Mamuka Terashvili, and many other managers and staff from the GRS.
- Special acknowledgment: Ms. Mariam Margiani for facilitating the assessment’s work.
- A draft performance assessment report was presented at the close of the in-country assessment; written comments received from the GRS were considered and, as appropriate, reflected in the final version reviewed in IMF headquarters (HQ) and the TADAT Secretariat.

### Executive summary — overall findings
- The assessment measures critical outcomes of GRS tax administration against international good practice, based on evidence made available to the assessment team.
- Overall view: GRS is making good progress in implementing modern tax administration practices, with particularly innovative use of new technology to modernize operations and establish a platform for future opportunities.
- Major gap: absence of an effective GRS-wide management information and reporting system for senior management to monitor key operations and strategic initiatives.
- Some international good practices are already in place (e.g., taxpayer services and dispute resolutions); others are in progress (e.g., risk management); some have yet to be adopted (e.g., VAT refund processing has fundamental design and operational weaknesses undermining the efficient operation of the VAT).

### Identified main strengths
- Extensive use of modern information technology (IT) applications (taxpayer portal, e-filing, e-payment, tablets for district tax officers).
- Good taxpayer service record (call center, service centers, ‘privé’ tax advisor program).
- Willingness to embrace innovation.
- Effective advance payment system.
- Emerging focus on compliance risk assessment and management.
- Good engagement with taxpayers (public rulings, open door days, student education program).
- Simplified systems for small taxpayers.
- Accessible and independent dispute resolution mechanism.

### Identified main weaknesses
- Organization-wide weaknesses in operational planning and performance monitoring.
- Lack of control of the tax register.
- Low filing compliance rates with inadequate follow-up of nonfilers.
- Serious flaws in the design and operation of the VAT refund system with consequent accumulation of unpaid VAT credits.
- Very restricted access to bank account data.
- Large and growing stock of old and uncollectible arrears.
- No focus on institutional risks.
- General failure to evaluate impact of initiatives (satisfaction surveys, impact of audit and compliance mitigation programs).

### Assessment intent and timeframe
- Many weaknesses can be rectified relatively quickly; in some areas, small changes can make a big difference.
- The assessment is intended to establish a performance baseline against which the success of modernization initiatives may be assessed over the next two–five years.

### TADAT scoring framework and summary results
- Scoring structured around TADAT’s 9 performance outcome areas (POAs) and 27 high level indicators critical to tax administration performance.
- An ‘ABCD’ scale is used to score each indicator: ‘A’ highest performance, ‘D’ lowest.
- Table 1: Summary of TADAT Performance Assessment (selected items, scores, and summary explanations)
  - POA 1: Integrity of the Registered Taxpayer Base
    - P1-1. Accurate and reliable taxpayer information. — D
      - The tax register, based on a register held by the National Agency for Public Registry (NAPR), is not adequate for tax administration.
    - P1-2. Knowledge of the potential taxpayer base. — C
      - Detecting unregistered taxpayers is not a planned activity and there is no system to enforce registration.
  - POA 2: Effective Risk Management
    - P2-3. Identification, assessment, ranking, and quantification of compliance risks. — C
      - Good work is being done on compliance risk assessment, but it is in a developmental stage and is hampered by lack of bank account data.
    - P2-4. Mitigation of risks through a compliance improvement plan. — C
      - The compliance improvement plan is not fully resourced or monitored.
    - P2-5. Monitoring and evaluation of compliance risk mitigation activities. — C
      - Governance arrangements are in place for approving compliance risk mitigation strategies, but outcomes of mitigation actions are not generally evaluated.
    - P2-6. Identification, assessment, and mitigation of institutional risks. — D
      - There is no evidence that institutional risks have been considered and there is no business continuity plan in place.
  - POA 3: Supporting Voluntary Compliance
    - P3-7. Scope, currency, and accessibility of information. — B
      - A wide range of information is provided through easily accessible channels, but there are some problems with call center line capacity.
    - P3-8. Scope of initiatives to reduce taxpayer compliance costs. — B
      - Important steps have been taken to reduce taxpayer compliance costs; systematic review of form design is absent.
    - P3-9. Obtaining taxpayer feedback on products and services. — C
      - Some taxpayer feedback is obtained but it is not systematically gathered, analyzed and acted upon.
  - POA 4: Timely Filing of Tax Declarations
    - P4-10. On-time filing rate. — C
      - On-time filing rates are low for all core taxes.
    - P4-11. Use of electronic filing facilities. — A
      - More than 99 percent of declarations received are filed electronically.
  - POA 5: Timely Payment of Taxes
    - P5-12. Use of electronic payment methods. — A
      - All core taxes are paid electronically.
    - P5-13. Use of efficient collection systems. — B
      - Effective use is made of withholding and advance payment systems, but third party reporting is not optimized.
    - P5-14. Timeliness of payments. — B
      - The on-time payment rate is high in respect of filed VAT declarations.
    - P5-15. Stock and flow of tax arrears. — D+
      - The burden of old uncollectible debt, with accumulating interest charges, militates against collection efficiency.
  - POA 6: Accurate Reporting in Declarations
    - P6-16. Scope of verification actions taken to detect and deter inaccurate reporting. — C
      - Audit and verification activities are wide-ranging, but not well planned or evaluated.
    - P6-17. Extent of proactive initiatives to encourage accurate reporting. — B
      - A good system of public rulings (case studies) is in place to foster accurate reporting, but no attempts have been made to develop cooperative compliance approaches with large taxpayers.
    - P6-18. Monitoring the extent of inaccurate reporting. — D
      - The GRS does not monitor the extent of revenue losses from inaccurate reporting.
  - POA 7: Effective Tax Dispute Resolution
    - P7-19. Existence of an independent, workable, and graduated dispute resolution process. — A
      - A graduated and independent dispute resolution mechanism is widely used.
    - P7-20. Time taken to resolve disputes. — C
      - The dispute resolution process is too slow.
    - P7-21. Degree to which dispute outcomes are acted upon. — C
      - The outcome of dispute cases is monitored, but not all material outcomes are systematically analyzed and acted upon.
  - POA 8: Efficient Revenue Management
    - P8-22. Contribution to government tax revenue forecasting process. — C
      - The GRS is in the early stages of developing a revenue monitoring and analysis capability.
    - P8-23. Adequacy of the tax revenue accounting system. — C
      - The automated tax revenue accounting system provides essential functionality, but has not undergone a full, system-based audit.
    - P8-24. Adequacy of tax refund processing. — D
      - Fundamental flaws in the design and operation of the refund system undermine the integrity of the VAT.
  - POA 9: Accountability and Transparency
    - P9-25. Internal assurance mechanisms. — D+
      - Staff integrity assurance mechanisms are fragmented and the internal audit function needs to be developed.
    - P9-26. External oversight of the tax administration. — C
      - There is a degree of external oversight and investigation of wrongdoing, but the organizational response is not cohesive.
    - P9-27. Public perception of integrity. — C
      - Independent and wide-ranging perception studies (not initiated by GRS) have been done at four-year intervals.
    - P9-28. Publication of activities, results, and plans. — D+
      - Delay in publishing annual reports and weak operational planning processes cause low scores for transparency.

### Distribution of performance scores (indicator list)
- P1-1 D
- P1-2 C
- P2-3 C
- P2-4 C
- P2-5 C
- P2-6 D
- P3-7 B
- P3-8 B
- P3-9 C
- P4-10 C
- P4-11 A
- P5-12 A
- P5-13 B
- P5-14 B
- P5-15 D+
- P6-16 C
- P6-17 B
- P6-18 D
- P7-19 A
- P7-20 C
- P7-21 C
- P8-22 C
- P8-23 C
- P8-24 D
- P9-25 D+
- P9-26 C
- P9-27 C
- P9-28 D+

### Introduction to TADAT methodology (key points)
- Report structured around TADAT framework of 9 POAs and 27 high level indicators; 47 measurement dimensions inform indicator scores.
- Four-point ‘ABCD’ scale defined as:
  - ‘A’: performance that meets or exceeds international good practice.
  - ‘B’: sound performance but below international good practice.
  - ‘C’: weak performance relative to international good practice.
  - ‘D’: inadequate performance or insufficient information to assess.
- TADAT limitations and scope:
  - Assesses administration of major direct and indirect taxes critical to central government revenues: corporate income tax (CIT), personal income tax (PIT), VAT, and pay-as-you-earn (PAYE).
  - Evidence based.
  - Not designed to assess special tax regimes (e.g., natural resource sector) nor customs administration.
  - Provides assessment within existing revenue policy framework; highlights issues that may require administrative and policy responses.
- TADAT aims:
  - Identify relative strengths and weaknesses in tax administration.
  - Facilitate shared view among stakeholders.
  - Set the reform agenda (objectives, priorities, initiatives, sequencing).
  - Facilitate management and coordination of external support.
  - Monitor and evaluate reform progress through repeat assessments.

### Country background and economic context (selected data)
- Assessment conducted by IMF mission to Georgia during May 25–June 9, 2016 and subsequently reviewed in IMF HQ and by the TADAT Secretariat.
- Real GDP growth:
  - Real GDP grew by an estimated 2.8 percent in 2015, down from 4.6 percent in 2014.
  - Growth is expected to reach 3.4 percent in 2016, before rising to around 5 percent in 2017.
- Inflation: The inflation rate has remained relatively low since 2012, at 5 percent or lower.
- External position and risks:
  - Current account deficit: 11.7 percent of GDP in 2015.
  - Risks include monetary policy normalization in advanced countries, low Euro area growth affecting exports and remittances, potential depreciation of the Georgian Lari (GEL) given high loan dollarization and foreign currency denominated external debt, and domestic political risks related to the 2016 parliamentary elections.
- Opportunities:
  - Attractive business environment by world and regional standards.
  - Deep and Comprehensive Free Trade Area agreed with the EU in 2014 creates new investment opportunities.
  - Lower oil prices expected to help reduce the current account deficit and inflation, and boost growth.

*IMF TADAT assessment: PREFACE (May 25–June 9, 2016) — final version reviewed in IMF HQ and by the TADAT Secretariat.*

### 3.23 percent of GDP, is scheduled to be changed in January, 2017. The new system will not

### _cr16283 - 3.23 percent of GDP, is scheduled to be changed in January, 2017. The new system will not

### Tax system change and revenue shares
- A tax system change, scheduled in January, 2017, will not charge CIT on corporate profits, but only on distributions of corporate profits.
- Contributions to GDP:
  - PIT: 7 percent
  - VAT: 11 percent
- Further details on tax revenue collections are provided in Table 1 of Attachment III.

### Institutional framework and administration
- The GRS is a legal entity within the Ministry of Finance (MoF), responsible for administration of both tax and customs.
- Governance and staffing:
  - Day-to-day administration is the responsibility of the DG, who is also First Deputy Minister of Finance.
  - Three DDGs assist the DG in managing 12 departments.
  - The GRS has 3,426 employees, including 1,472 in customs.
  - The GRS does not have a full-service regional structure: 16 service centers (4 in Tbilisi, 12 in regions) and 16 district offices (6 in Tbilisi, 10 in regions).
- Registration and tax register:
  - The tax register is based on the NAPR register; it contains name, address, contact details, and date of birth or incorporation, but not generally business sector.
  - Legal entities/foreign-born individuals receive a unique nine-digit tax identification number; Georgian nationals are registered with an 11-digit national identity number (ID).
  - The GRS register relies fully on the NAPR database and does not record tax type obligations apart from VAT; it does not record filing or payment obligations for CIT, PIT, or PAYE Withholding.
  - NAPR data changes (e.g., change of address or cessation of business) can only be amended at taxpayer request for a fee, making the register unreliable for routine management information.
  - Remedial actions:
    - A sub-register for VAT and an electronic file to note taxpayer details (e.g., changes of address) have been developed by GRS.
    - A register cleansing exercise undertaken in 2015 identified and removed almost 500,000 duplicated, once-off, or defunct registrations.
    - The GRS register at December 31, 2015 is a good deal more reliable than in previous years, but register maintenance is not an ongoing program and maintaining accuracy has not been regarded as a GRS priority.

### International information exchange
- Georgia is a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes.
- A Phase 1 peer review assessed Georgia’s legal and regulatory framework in 2014.
- A Phase 2 peer review published by the Global Forum in March 2016 found Georgia largely compliant and that Georgia had taken action on a key Phase 1 recommendation regarding powers to access banking information.
- Georgia has double taxation agreements with 54 countries and is a signatory of the OECD Convention on Mutual Administrative Assistance in Tax Matters.

### POA 1 — Integrity of the Registered Taxpayer Base (scores and findings)
- Performance indicators used:
  - P1-1—Accurate and reliable taxpayer information.
  - P1-2—Knowledge of the potential taxpayer base.
- Table-based assessment excerpts (preserve original scoring notation):
  - P1-1:
    - P1-1-1. The adequacy of information held in respect of registered taxpayers and the extent to which the registration database supports effective interactions with taxpayers and tax intermediaries. — M1  D  D
    - P1-1-2. The accuracy of information held in the registration database. — C
  - P1-2:
    - P1-2. The extent of initiatives to detect businesses and individuals who are required to register but fail to do so. — M1  C
- Findings:
  - The register does not record core taxpayer obligations (except VAT) and lacks segmentation by business sector, limiting usefulness for filing enforcement and compliance risk management.
  - Because initial registration responsibility rests with NAPR, GRS does not take full control of the tax register and does not use it for management information.
  - A substantial cleansing in 2015 removed almost 500,000 invalid registrations, improving reliability as of December 31, 2015, but ongoing maintenance is lacking.
  - Detection of unregistered businesses:
    - Tax monitoring officers detect unregistered businesses through unannounced visits and goods-in-transit checks; almost 1,200 detections were recorded in the first four months of 2016.
    - Registration can only be effected through NAPR with taxpayer consent; there is no method for compulsory registration, so the number actually added to the register from detections is unclear.

### POA 2 — Effective Risk Management (scores and findings)
- Performance indicators used:
  - P2-3—Identification, assessment, ranking, and quantification of compliance risks.
  - P2-4—Mitigation of risks through a compliance improvement plan.
  - P2-5—Monitoring and evaluation of compliance risk mitigation activities.
  - P2-6—Identification, assessment, and mitigation of institutional risks.
- Table-based assessment excerpts:
  - P2-3:
    - P2-3-1. The extent of intelligence gathering and research to identify compliance risks in respect of the main tax obligations. — M1  C  C
    - P2-3-2. The process used to assess, rank, and quantify taxpayer compliance risks. — C
  - P2-4. The degree to which the tax administration mitigates assessed risks to the tax system through a compliance improvement plan. — M1  C
  - P2-5. The process used to monitor and evaluate the impact of compliance risk mitigation activities. — M1  C
  - P2-6. The process used to identify, assess, and mitigate institutional risks. — M1  D
- Findings:
  - Risk analysis is at a developmental stage; intelligence gathering and research to identify compliance risks are limited.
  - Data sources used include internal data (tax and customs declarations, cash register data, electronic invoicing) and some third-party data (property ownership from NAPR, Ministry of Interior data).
  - Lack of access to bank account data is identified as a serious drawback for full risk analysis.
  - The Tax Risk Management Division (TRMD) is developing a compliance risk management (CRM) approach; GRS published a Compliance Strategy 2015–16.
  - About 50 individual compliance risks have been identified across tax types and taxpayer segments.
  - Mitigation activities:
    - A simple compliance improvement plan and five action plans for risk mitigation exist, but progress is not regularly monitored.
    - Mitigation focuses mainly on audit case selection using case selection software; a quarterly list of about 400 potential audits is compiled.
    - Other mitigation activities include sample purchasing, letter campaigns, customer service initiatives, and proposed legislative changes (e.g., proposed amendment to Article 44 of the Tax Code to deem electronically served notice delivered).
  - Monitoring and evaluation:
    - Formal governance arrangements exist, including a Risk Management Council chaired by the DG, but implementation of strategies is not well monitored or evaluated routinely.
    - One evaluated example involved strategies to mitigate under-declaration of property tax via different letter treatments, which showed increased compliance in that sector.
  - Institutional risk management:
    - No evidence of consideration of institutional risks within GRS; no business continuity plan in place.
    - No documented process to identify, assess, mitigate, and manage institutional risks; GRS staff are not trained in disaster recovery procedures.
    - MoF mitigation plans for IT system risks were suggested, but no evidence was provided to the assessment team.

### POA 3 — Supporting Voluntary Compliance (scores and findings)
- Performance indicators used:
  - P3-7—Scope, currency, and accessibility of information.
  - P3-8—Scope of initiatives to reduce taxpayer compliance costs.
  - P3-9—Obtaining taxpayer feedback on products and services.
- Table-based assessment excerpts for P3-7:
  - P3-7-1. The range of information available to taxpayers to explain, in clear terms, what their obligations and entitlements are in respect of each core tax. — M1  A  B
  - P3-7-2. The degree to which information is current in terms of the law and administrative policy. — B
  - P3-7-3. The ease by which taxpayers obtain information from the tax administration. — A
  - P3-7-4. The time taken to respond to taxpayer and intermediary requests for information. — B
- Findings on information, outreach, and service channels:
  - GRS provides a range of information in clear terms on core taxes, taxpayer obligations (registration, filing, payment, reporting), and associated rights.
  - Publicly available materials include the GRS website, FAQ, almost 450 case studies (public rulings), news items, and forms.
  - A comprehensive ‘Tax Pocket Book’ is published only in English.
  - Website content maintenance is supported by technical staff and the public relations division; a working group reviews currency of website information.
  - Information delivery channels:
    - The GRS website and taxpayer portal (‘The Taxpayer’s Page’).
    - Walk-in service centers.
    - A centralized inbound call center operating during normal business hours.
    - Letters, e-mails, text messages, GRS visits to businesses, public seminars, and mass media announcements.
  - Targeted support programs:
    - District tax officer program: 108 trained district tax officers visit taxpayers (including newly registered businesses) free of charge.
    - Private tax advisor program (‘Privé’): 28 trained Privé officers serve the needs of over 300 taxpayers on a 24/7 basis; a nominal service fee is charged on a progressive scale.
    - Advance tax rulings: fee-based at GEL 10,000 per ruling, targeted at large taxpayers.
    - GRS ‘Open Door Days’, seminars, and a recently launched schools program.
  - Call center performance:
    - 98.6 percent of telephone enquiry calls received are answered within 6 minutes’ waiting time (Table 3 in Attachment III).
    - The call center can accommodate a maximum of 60 callers at a time; line overload during peak periods is not captured in the Table 3 data and has led to an adjusted assessment score of ‘B’.
- P3-8 (assessment and examples):
  - P3-8. The extent of initiatives to reduce taxpayer compliance costs. — M1  B
  - Initiatives include:
    - Simplified tax arrangements and concessions for micro businesses (entrepreneurs with annual income less than GEL 30,000).
    - Simplified accounting, record-keeping, filing, and payment arrangements for small businesses (annual income less than GEL 100,000).
    - Elimination of the obligation to file for non-entrepreneur individuals with relatively simple income tax affairs (e.g., employees whose salary income is taxed at source).

*Source: IMF staff report content as provided in the supplied PDF excerpt.*

### introduction of modern electronic and communication facilities—particularly the taxpayer

### introduction of modern electronic and communication facilities—particularly the taxpayer portal

### Taxpayer services and feedback (POA 3 — P3-9)
- Pre-filling of tax declarations is not undertaken.
- Modern electronic and communication facilities, particularly the taxpayer portal, have contributed to lower taxpayer costs for filing, payment, and communicating with the GRS.
- Review of tax declarations and forms to ensure only needed information is sought exists but is not done in a regular or systematic way.
- P3-9 Assessment scores (2016):
  - P3-9-1. The use and frequency of methods to obtain performance feedback from taxpayers on the standard of services provided. — Score: C
  - P3-9-2. The extent to which taxpayer input is taken into account in the design of administrative processes and products. — Score: A
- Findings:
  - Apart from the Privé service (about 300 clients) and a USAID G4G perception study, few attempts are made to obtain taxpayer feedback.
  - Surveys exist (e.g., on ‘Open Door Days’ in 2015) but results were not established by the assessment team.
  - Some feedback is captured in customer service centers, but there is no evidence that it is analyzed or monitored.
  - Strong engagement via collaborative development of public rulings/case studies: Coordination Council has 33 members, 17 of whom are tax intermediaries or lawyers; council meets regularly and publishes case studies on the GRS website.
  - Evidence of taxpayer involvement in form design and testing (example: petroleum products form changed significantly following input).
  - A training/demo version of the taxpayers’ portal is available.

### Timely filing of tax declarations (POA 4 — P4-10, P4-11)
- Filing remains the principal means for establishing tax liability; trend toward electronic filing and pre-filling internationally noted, but pre-filling not practiced here.
- P4-10 On-time filing rate — Measurement and scores (2016):
  - P4-10-1 CIT on-time filings — Score: C
  - P4-10-2 PIT on-time filings — Score: C
  - P4-10-3 VAT on-time filings — Score: C
  - P4-10-4 PAYE withholding on-time filings — Score: C
- On-time filing rates (as shown in Attachments referenced):
  - CIT: 70 percent
  - PIT: 54 percent
  - VAT: 62 percent
  - PAYE withholding: 57 percent
- Explanatory findings:
  - Low on-time filing rates reflect absence of filing performance monitoring, lack of a filing enforcement program, and weaknesses in taxpayer register (inactive cases affect denominators).
  - Large taxpayers have higher on-time filing rates (large taxpayer CIT and VAT on-time filing rates are more than 90 percent).
- P4-11 Electronic filing (2016):
  - P4-11 score: A
  - More than 99 percent of declarations received are filed electronically for each of the core taxes.

### Timely payment of taxes (POA 5 — P5-12 to P5-15)
- P5-12 Electronic payments (2016):
  - P5-12 score: A
  - All core taxes are paid electronically.
- P5-13 Use of withholding/advance payments (2016):
  - P5-13 score: B
  - Findings:
    - Withholding of PIT at source for employment income exists.
    - Corporations and entrepreneurs pay CIT and PIT through a quarterly advance payment system.
    - Withholding and mandatory reporting apply to dividend income for Georgian residents, but not for interest paid by commercial banks.
    - Law does not require mandatory automatic reporting by financial institutions.
- P5-14 Timeliness of payments (VAT proxy) (2016):
  - P5-14-1 Number of VAT payments on time — Score: B
  - P5-14-2 Value of VAT payments on time — Score: A
  - VAT on-time payment rates: 87 percent (by number) and 91 percent (by value).
- P5-15 Stock and flow of tax arrears (2016):
  - P5-15-1 Total core tax arrears as % of annual core tax revenue collections — Score: D
  - P5-15-2 Collectible core tax arrears as % of annual core tax revenue collections — Score: D+
  - P5-15-3 Core tax arrears more than 12 months old as % of all core tax arrears — Score: D
- Arrears findings and figures:
  - Total accumulated arrears at end-2015 exceeded GEL 5.8 billion, equivalent to over 70 percent of annual tax collections.
  - Around 90 percent of total arrears are more than 12 months old.
  - Accrued interest and penalties account for about two-thirds of total arrears (i.e., GEL 3.9 billion).
  - GRS estimate of collectible arrears at end-2015: GEL 555 million, and therefore around 7 percent of total arrears.

### Accurate reporting in declarations (POA 6 — P6-16 to P6-18)
- P6-16 Scope of verification actions (2016):
  - P6-16-1 Nature and scope of audit program — Score: C
  - P6-16-2 Extent of large-scale automated crosschecking — Score: C
- Verification findings:
  - Almost 400 auditors (desk and field); most based in Tbilisi, some desk presence in four regions.
  - Audit types: comprehensive field audits (about 1,000 each year), limited scope desk audits (about 2,500 each year), plus single-issue, multi-year, and VAT audits.
  - Audits selected centrally from risk-ranked quarterly lists by TRMD.
  - Auditors can access bank account data only with taxpayer consent or by court order.
  - Audit activities are not well planned: no annual audit plan, no outcomes measurement, limited evidence of targeting by case size or sector.
  - Some large-scale automated crosschecking exists (VAT vs profits tax, electronic invoices, customs, waybills, cash registers, motor vehicle registration, property ownership), but lack of banking and financial institution reporting is a serious limitation.
- P6-17 Proactive initiatives (2016):
  - P6-17 score: B
  - Findings:
    - Binding public rulings developed in consultation with tax intermediaries; over 400 case studies available on the GRS website.
    - Council for Development of Case Studies set up in 2010; includes private sector and ombudsman representation.
    - Formal legal process for binding private/advance rulings by MoF: law provides 60 days to refuse or commit and further 30 days for decision. Only 50 or 60 private rulings issued each year.
    - GRS issues formal ‘opinions’ that are not binding.
    - No cooperative compliance arrangements; the Large Taxpayer Office (LTO) was dismantled in 2010. Privé service provides enhanced service but not cooperative compliance agreements.
- P6-18 Monitoring inaccurate reporting (2016):
  - P6-18 score: D
  - Finding: GRS does not monitor extent of revenue losses from inaccurate reporting; no analysis or monitoring by tax type or taxpayer segment; no tax gap studies undertaken.

### Effective tax dispute resolution (POA 7 — P7-19 to P7-21)
- P7-19 Availability and independence of dispute process (2016):
  - P7-19-1 Graduated administrative and judicial review — Score: A
  - P7-19-2 Independence of administrative review mechanism — Score: A
  - P7-19-3 Publication and taxpayer awareness of the dispute process — Score: A
- Findings:
  - Graduated mechanism exists and is widely used: GRS dispute resolution council, MoF dispute resolution council, and three levels of judicial appeal.
  - Administrative review is independent of audit; procedures documented in a disputes manual.
  - Taxpayers are informed of dispute rights at audit completion and via the taxpayer portal; acknowledgment required.
- P7-20 Time to resolve disputes (2016):
  - P7-20 score: C
  - Statutory time limit for completion of a dispute: 65 days.
  - 45 percent of disputes resolved within 30 days; cumulative 86 percent resolved within 60 days.
  - Assessment: while most disputes are resolved within statutory limit, the statutory limit is considered too long.
- P7-21 Degree to which dispute outcomes are acted upon (2016):
  - P7-21 score: C
  - Findings:
    - GRS reviews dispute outcomes and has a small monitoring unit; process is not systematic and not all material outcomes are acted upon.
    - In 2015, eleven proposals for legislative change were sent to the legal department via this mechanism, but systematic identification and feedback into policy/administration is limited.

### Efficient revenue management (POA 8 — P8-22 to P8-24)
- P8-22 Contribution to revenue forecasting (2016):
  - P8-22 score: C
  - Findings:
    - Information processing and analysis division of 11 staff monitors and reports on tax revenue collections against budget projections and provides data and basic analytical input to MoF forecasting.
    - Capability does not extend to sophisticated modeling (e.g., tax expenditures, carry-forward loss estimates), but does make VAT refund forecasts.
- P8-23 Tax revenue accounting system adequacy (2016):
  - P8-23 score: C
  - Findings:
    - Automated revenue accounting system provides essential functionality: interfaces with MoF accounting, single account per taxpayer, posts payments within one–two business days, suspense account, online access for authorized staff, audit trails.
    - No evidence of a full system-based audit specifically ensuring alignment with tax laws and government accounting standards.
- P8-24 VAT refund processing (2016):
  - P8-24-1 Adequacy of VAT refund system — Score: D
  - P8-24-2 Time taken to pay/offset VAT refunds — Score: D
- VAT refund findings and figures:
  - No risk-based assessment of refund applications; taxpayers with good and poor compliance histories treated alike.
  - Large stock of unclaimed excess VAT credits: GEL 1,087 million as at end-2015.
  - Low number of refund claims: less than 400 claims in 2015 from a registered active taxpayer base of 72,000.
  - Around 60 percent of refund claims were declined in 2015.
  - Consequence: inability to reliably assess time taken to pay or offset excess credits; system compromised relative to invoice-credit VAT international good practice.

### Accountability and transparency (POA 9 — P9-25 to P9-28)
- P9-25 Internal assurance mechanisms (2016):
  - P9-25-1 Assurance provided by internal audit — Score: D+
  - P9-25-2 Staff integrity assurance mechanisms — Score: D
- Internal assurance findings:
  - GRS has no dedicated internal audit; MoF internal audit (IA) covers GRS. MoF IA staff: seven (one qualified).
  - MoF IA conducts financial and compliance audits; first systems-based audit (call center) completed recently.
  - MoF IA lacks capacity to audit IT systems.
  - Staff integrity mechanisms are fragmented; no single unit responsible; GRS lacks a code of ethics for tax officials (work paused pending public service-wide code due 2017); no ethics training delivered yet.
  - Staff monitoring department (18 persons) exists but lacks appropriate investigative powers and training for tax-specific investigations.
- P9-26 External oversight (2016):
  - P9-26-1 Independent external oversight of operations and financial performance — Score: C
  - P9-26-2 Investigation process for suspected wrongdoing and maladministration — Score: C
- External oversight findings:
  - GRS subject to annual financial and compliance audit by the State Audit Office (SAO); SAO reports published on its website.
  - No program to audit operational performance.
  - No formal system to monitor ombudsman or anti-corruption recommendations; limited evidence that systemic recommendations are acted upon.
  - An Investigation Department in the MoF investigates wrongdoing by GRS staff.
- P9-27 Public perception of integrity (2016):
  - P9-27 score: C
  - Findings:
    - Public confidence monitored through business surveys but not regularly. IFC survey in 2012 (1,029 firms) and USAID G4G Deloitte study published May 10, 2016 (1,033 companies) showed generally positive results, particularly for taxpayer services.
    - GRS has not initiated frequent surveys to keep regular track of trends.
- P9-28 Publication of activities, results, and plans (2016):
  - P9-28-1 Publication of financial and operational performance — Score: D+
  - P9-28-2 Publication of future directions and plans — Score: C
  - Findings:
    - GRS publishes an annual report but not in a timely manner (2013 Annual Report published; 2014 Annual Report produced and approved but not yet public).
    - No annual operational planning process; future directions are published as part of the Government’s Strategic Plan for Public Financial Management.

*Source: _cr16283 - introduction of modern electronic and communication facilities—particularly the taxpayer portal (IMF assessment content as provided).*

### Chapter II of Georgia’s Strategic Plan for PFM 2016 outlines the strategic plan of

### Chapter II of Georgia’s Strategic Plan for PFM 2016

### Strategic plan and reporting
- The GRS has a strategic plan outlined in Chapter II of Georgia’s Strategic Plan for PFM 2016.
- Reports on progress on this plan are made quarterly to the Minister of Finance.
- The GRS has published its Compliance Strategy 2015–16 and this is available on its website and in hard copy in the taxpayer service centers.
- Reference: http://www.mof.ge/4937.

### Attachment I. TADAT Framework — Performance outcome areas
- TADAT assesses the performance of a country’s tax administration system by reference to nine outcome areas:

  1. Integrity of the registered taxpayer base: Registration of taxpayers and maintenance of a complete and accurate taxpayer database is fundamental to effective tax administration.

  2. Effective risk management: Performance improves when risks to revenue and tax administration operations are identified and systematically managed.

  3. Support given to taxpayers to help them comply: Usually, most taxpayers will meet their tax obligations if they are given the necessary information and support to enable them to comply voluntarily.

  4. On-time filing of declarations: Timely filing is essential because the filing of a tax declaration is a principal means by which a taxpayer’s tax liability is established and becomes due and payable.

  5. On-time payment of taxes: Nonpayment and late payment of taxes can have a detrimental effect on government budgets and cash management. Collection of tax arrears is costly and time consuming.

  6. Accuracy of information reported in tax declarations: Tax systems rely heavily on complete and accurate reporting of information in tax declarations. Audit and other verification activities and proactive initiatives of taxpayer assistance, promote accurate reporting and mitigate tax fraud.

  7. Adequacy of dispute resolution processes: Independent accessible, and efficient review mechanisms safeguard a taxpayer’s right to challenge a tax assessment and get a fair hearing in a timely manner.

  8. Efficient revenue management: Tax revenue collections must be fully accounted for, monitored against budget expectations, and analyzed to inform government revenue forecasting. Legitimate tax refunds to individuals and businesses must be paid promptly.

  9. Accountability and transparency: As public institutions, tax administrations are answerable for the way they use public resources and exercise authority. Community confidence and trust are enhanced when there is open accountability for administrative actions within a framework of responsibility to the minister, legislature, and general community.

### Attachment I. TADAT Framework — Indicators and measurement dimensions
- A set of 28 high-level indicators critical to tax administration performance are linked to the POAs. It is these indicators that are scored and reported on.
- A total of 47 measurement dimensions are taken into account in arriving at the indicator scores.
- Each indicator has between one and four measurement dimensions.
- Repeated assessments will provide information on the extent to which a country’s tax administration is improving.

### Attachment I. TADAT Framework — Scoring methodology
- The assessment of indicators follows the same approach followed in the Public Expenditure and Financial Accountability diagnostic tool so as to aid comparability where both tools are used.
- Each of TADAT’s 47 measurement dimensions is assessed separately. The overall score for an indicator is based on the assessment of the individual dimensions of the indicator.
- Combining the scores for dimensions into an overall score for an indicator is done using one of two methods: Method 1 (M1) or Method 2 (M2). For both M1 and M2, the four-point ‘ABCD’ scale is used to score each dimension and indicator.
- Method M1:
  - Used for all single dimensional indicators and for multi-dimensional indicators where poor performance on one dimension of the indicator is likely to undermine the impact of good performance on other dimensions of the same indicator (in other words, by the weakest link in the connected dimensions of the indicator).
- Method M2:
  - Based on averaging the scores for individual dimensions of an indicator.
  - Used for selected multi-dimensional indicators where a low score on one dimension of the indicator does not necessarily undermine the impact of higher scores on other dimensions for the same indicator.

### Attachment II. Georgia: Country Snapshot — Geography and population
- Geography:
  - Georgia is located between Eastern Europe and West Asia and covers a territory of 69,700 sq. km (c.27,000 sq. mi).
  - Bounded to the west by the Black Sea, to the north and northeast by Russia, to the south by Turkey and Armenia, and to the southeast by Azerbaijan.
  - Nestled between the Greater Caucasus and Lesser Caucasus mountain ranges.
  - The capital and largest city is Tbilisi.
- Population:
  - 3.7295 million January 2015 (Source http://www.geostat.ge/.)
- Adult literacy rate

*Source: _cr16283 - Chapter II of Georgia’s Strategic Plan for PFM 2016 outlines the strategic plan of*

### 99.75 percent of persons aged 15 and over can read and write.

### _cr16283 - 99.75 percent of persons aged 15 and over can read and write.

### Demographics and human capital
- Literacy: 99.75 percent of persons aged 15 and over can read and write. (Source: UNESCO.org).

### Macroeconomic indicators
- 2014 nominal GDP: GEL 29.2 billion (US$16.1 billion). (Source: IMF.)
- Per capita GDP: US$3,676.20 (2014). (Source: http://www.geostat.ge/.)

### Main industries
- Cultivation of agricultural products such as grapes, citrus fruits, and hazelnuts.
- Mining of manganese, copper, and gold.
- Producing alcoholic and nonalcoholic beverages, metals, machinery, and chemicals in small-scale industries. (Source: Central Intelligence Agency World Factbook.)

### Communications infrastructure (2014)
- Internet users per 100 people: 48.9.
- Mobile phone subscribers per 100 people: 124.9. (Source: World Bank.)

### Tax system overview
- Main taxes: six taxes in Georgia, of which five (PIT, CIT, VAT, excise tax, and import tax) are state-wide, and one (property tax) is a local tax. (Source: Georgia MoF 2014.)
- Tax-to-GDP: For 2015, tax to GDP was 25.2 percent including 0.2 percent customs tax collections. (Source: IMF.)
- Number of taxpayers (2015): CIT 108,926; PIT 261,639; PAYE (employers) 119,259; VAT 72,220.
- Main collection agency: GRS.
- Number of staff in the main collection agency: 3,426 (including 1,472 in Customs).
- Financial year: Calendar year.

### Tax revenue collections (Table 1, 2013–15) — key figures
- Budgeted tax revenue target (Millions local currency): 2013 7,2897,230 2014 7,980
- Total tax revenue collections (Millions local currency): 2013 6,659 2014 7,242 2015 8,011
- Selected tax collection lines (Millions local currency, 2013/2014/2015):
  - CIT: 807 829 1,025
  - PIT: 1,934 1,939 2,223
  - VAT—gross domestic collections: 2,262 2,126 1,868
  - VAT—collected on imports: 586 1,172 1,638
  - VAT—refunds: -86 -111 -123
  - Excises on domestic transactions: 205 212 220
  - Excises on import: 517 598 651
  - Other domestic taxes: 252 265 309
  - Other customs duties: 96 101 77
- Percentage of total tax revenue collections (selected, 2013/2014/2015):
  - CIT: 12.11 11.45 12.79
  - PIT: 29.04 26.77 27.75
  - VAT—gross domestic collections: 33.97 29.36 23.32
  - VAT—collected on imports: 8.80 16.18 20.45
  - Excises on domestic transactions: 3.09 2.93 2.75
  - Excises on import: 7.76 8.26 8.13
  - Other domestic taxes: 3.78 3.66 3.86
  - Other customs duties: 1.44 1.39 0.96
- Total tax revenue collections as percent of GDP: 24.80 24.84 25.28
- Nominal GDP in local currency: 26,847.4 29,150.5 31,691.6

### Movements in the Taxpayer Register (Table 2, 2013–15) — selected figures
- CIT end-year total (Active / Inactive / Total / Percentage inactive / Deregistered during year):
  - 2013: 71,187 / 88,872 / 160,059 / 56.0 / 395
  - 2014: 76,210 / 97,649 / 173,859 / 56.1 / 366
  - 2015: 108,926 / 83,988 / 192,976 / 43.5 / 450
- PIT end-year total:
  - 2013: 354,216 / 752,366 / 1,106,582 / 67.9 / 1,010
  - 2014: 790,525 / 697,827 / 1,491,151 / 46.8 / 2,597
  - 2015: 261,639 / 157,861 / 419,500 / 37.6 / 12,617
- PIT withholding (employers) end-year total:
  - 2013: 77,689 / 110,198 / 187,887 / 58.6 / 463
  - 2014: 82,899 / 119,902 / 202,801 / 59.1 / 428
  - 2015: 119,259 / 104,389 / 223,648 / 46.6 / 547
- VAT end-year total:
  - 2013: 54,160 / 13,122 / 67,282 / 19.9 / 138
  - 2014: 60,253 / 16,976 / 77,229 / 22.0 / 149
  - 2015: 72,220 / 12,426 / 84,610 / 14.9 / 285

### Telephone enquiries (Table 3: May 2015–April 2016)
- Monthly total calls and percent answered within six minutes (selected months):
  - May 2015: 16,173 total; 15,786 answered; 97.60 percent.
  - June 2015: 16,193 total; 16,164 answered; 99.82 percent.
  - August 2015: 9,829 total; 9,274 answered; 94.35 percent.
  - March 2016: 14,431 total; 14,129 answered; 97.90 percent.
  - April 2016: 14,696 total; 14,217 answered; 96.74 percent.
- 12-month total: 161,582 total calls; 159,414 answered; 98.60 percent.
- Explanatory note: TADAT assessments apply a time-based standard of six minutes for telephone responses.

### Filing of declarations (On-time filing rates, 2015)
- CIT (Table 4):
  - Number of declarations filed on-time: 75,345
  - Number of declarations expected to be filed: 107,542
  - On-time filing rate: 70 percent
  - Large taxpayers only: 1,281 filed on-time of 1,384 expected; on-time filing rate 93 percent
- PIT (Table 5):
  - Number of declarations filed on-time: 142,328
  - Number of declarations expected to be filed: 261,639
  - On-time filing rate: 54 percent
- VAT (Table 6) — monthly and annual totals:
  - Monthly on-time filing rates ranged from 60 to 65 percent (January–December).
  - Full year total: 526,142 declarations filed on-time of 850,296 expected; on-time filing rate 62 percent
- VAT large taxpayers only (Table 7):
  - Monthly on-time filing rates mostly 93–95 percent.
  - Full year total: 15,345 filed on-time of 16,344 expected; on-time filing rate 94 percent
- PAYE withholding declarations filed by employers (Table 8):
  - Monthly on-time filing rates ranged from 56 to 60 percent.
  - Full year total: 821,289 filed on-time of 1,431,108 expected; on-time filing rate 57 percent

### Electronic services and use (Table 9, 2013–15)
- Electronic filing (In percent of all declarations filed for each tax type):
  - CIT: 2013 99.98 2014 99.99 2015 100
  - PIT: 2013 99.94 2014 99.96 2015 99.94
  - VAT: ≈100 ≈100 ≈100
  - PIT withholding (filed by employers): ≈100 ≈100 ≈100
- Electronic payments (In percent of total number and total value of payments received for each tax type):
  - CIT, PIT, VAT, and PIT withholding: 100 (for 2013, 2014, 2015) across number and value.

### Payments timeliness (Table 10, VAT Payments Made During 2015)
- Number of assessed VAT payments made on-time: 235,579 of 270,001 due; on-time payment rate 87 percent.
- Value of payments (in millions of GEL) made on-time: 1,956 of 2,144 due; on-time payment rate 91 percent.

### Domestic tax arrears (Table 11, 2013–15)
- Total tax revenue collected (Millions GEL): 2013 6,659; 2014 7,242; 2015 8,011.
- Total tax arrears at end of fiscal year (Millions GEL): 2013 5,140; 2014 6,166; 2015 5,846.
  - Principal and sanctions/interest breakdown (2015 snapshot): Principal 1,925; Sanctions and Interest 3,921.
  - Of which: Collectible (Millions GEL): 553.
  - Of which: Uncollectible (Millions GEL): 5,293 (presented in the source as uncollectible figure).
- Tax arrears more than 12 months old (D): 2013 4,749; 2014 5,418; 2015 5,155.
- Ratios (percent, as presented):
  - Ratio of (B) to (A): 2013 77 2014 85 2015 73.
  - Ratio of (D) to (B): 2013 92 2014 88 2015 88.

### Tax dispute resolution and VAT refunds
- Administrative reviews finalized in 2015 (Table 12):
  - 12-month total: 9,219 finalized; 4,109 finalized within 30 days (44.57 percent); 3,844 within 60 days (41.70 percent); 1,266 within 90 days (13.73 percent).
- VAT refunds for 2015 (Table 13):
  - Total VAT refund claims received (A): Number 380; Value in GEL 183,231,102.09.
  - Total VAT refunds paid: Number 153; Value in GEL 127,577,685.19.
  - Of which: paid outside 30 days: Number 53; Value in GEL 77,055,620.37.
  - Total VAT refund claims declined: Number 227; Value in GEL 55,653,416.90 (all declined within 30 days).
  - Ratio of (B+C) to (A): 73.7 (number) and 72.4 (value), as presented.

### Organizational structure and staffing (GRS as of June 2016)
- Director General: Giorgi Tabuashvili.
- Total staff: 3,426 Employees (including 1,472 in Customs).
- Major departments and reported staff counts:
  - Financial Department (215 Employees)
  - Tax Monitoring Department (359 Employees)
  - Customs Department (1,472 Employees)
  - Service Department (494 Employees)
  - Audit Department (452 Employees)
  - IT Center (85 Employees)
  - Dispute Resolution Department (62 Employees)
  - Legal Department (23 Employees)
  - Administrative Department (128 Employees)
  - Staff Office (90 Employees)
  - Staff Monitoring Department (15 Employees)
  - International Relations Department (21 Employees)

### Sources of evidence (selected indicators listed)
- P1-1 through P9-28: The document lists specific sources of evidence for indicators such as taxpayer information, compliance risk management, on-time filing rates, electronic filing and payment use, tax arrears, audit plans, dispute resolution, refund processing, internal audit reports, and public perception surveys. Specific documents, orders, plans, surveys, and web resources are cited in the source text for each indicator.

*Source: _cr16283 - 99.75 percent of persons aged 15 and over can read and write.*

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_Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2016/_cr16283.pdf_