The government-proposed draft of new tax code raised alarm bells among print media, fearing that the proposal would impose new taxes on printing press prompting shutting down of many newspapers.

The government officials, including Finance Minister, Kakha Baindurashvili, however, dismissed fears as groundless saying that there was no intention whatsoever to introduce any new taxes for the print media.

Fears were triggered after it was found out that text of the proposed draft misses out print media from the list of those services, which are exempt from value added taxes on advertising and sales.

Deputy Finance Minister, Irakli Siradze, was pressed on the matter by the print media representatives at a meeting on June 18, which was organized by Open Society – Georgia Foundation (OSGF) to discuss the government-proposed new tax code. At the meeting the Deputy Finance Minister failed to give a clear answer on the matter, however, said that missing out print media from the list could have been just “a technical error”, as the draft was only an initial version.

Kakha Baindurashvili, the finance minister, also said on June 19, that there could be some “technical errors” in the draft, adding that the government has no intention to impose new taxes on newspapers and magazines. “If there are some technical errors, they will definitely be corrected,” Baindurashvili told InterPressNews agency.

Lasha Tugushi, editor-in-chief of daily Rezonansi, who also represents the Georgian Press Association, said that if the draft was passed in its current wording it would force many newspapers to close. He said he hoped it was really “a misunderstanding”, which would be corrected.

The 267-page draft of new tax code has already been sent to the Parliament. After the approval by lawmakers, the draft will go into force starting from 2011.

The government said the draft change the current code by 98%, significantly eliminating those vague provisions in the code, which are now source of double interpretation.

One of the key novelties of the proposed draft is introduction of “micro business” category in which will fall those individual businessmen, whose annual turnover does not exceed GEL 30,000 and who do not use hired labor in their operations.

“Micro businessmen” will be fully exempt of income tax.

Another category will be “small business”, which will include businesses with annual turnover of no more than GEL 200,000. Income of such businesses will be taxed either with 3% or 5%. 3% taxation will apply in case if “a small business” provides standard accounting documentation for at least 60% of their turnover (not counting staff salaries). 3% taxation will also apply to those “small businesses,” which operate in “special trade zones”, for example in outdoor markets, according to the draft.

A position of tax ombudsman will be introduced, according to the draft, who will be appointed by Prime Minister. The government said that in cases, when tax disputes between a taxpayer and authorities are caused by possible ambiguous provision of the code, the Finance Ministry’s council for adjudication of tax disputes will be authorized to give an advantage to a taxpayer.