Parliament passed on December 18 with 74 votes to 13 with its second reading draft of amendments to the tax code envisaging introduction of nontaxable minimum income from salary and keeping rate of income tax unchanged at 20%.

According to the government-proposed amendment GEL 1,800 will be set as a minimum to which 20% income tax will not apply, but only for those employees, whose annual salary is GEL 6,000 (monthly GEL 500) or less.

The proposal, which requires confirmation with the third reading, means that if an employee has annual salary of GEL 6,000 or less, 20% of it will still be deducted as an income tax in 2013, but an employee will be able to get refund in an amount of GEL 360, that is 20% of nontaxable minimum of GEL 1,800, in 2014 upon submitting declaration to the tax authorities.

The government estimates that total of GEL 170 million will be required in 2014 budget for refunding of nontaxable minimum.

Draft of the 2013 state budget targets tax revenues to be GEL 6.92 billion next year of which GEL 1.805 billion is forecasted to be from personal income tax.

The proposed amendments to the tax code also means that there will be no reduction of personal income tax from current 20% to 18% as it is envisaged by the current tax code.

The previous government was also planning to drop income tax cut plan from next year, instead offering introduction of “voluntary personal savings system”; the proposal was even passed by the previous Parliament with its first and second readings, but then the proposal was shelved and not even voted in the Parliament with its final reading.

Lawmakers from the United National Movement (UNM) were against of the government-proposed amendments to the tax code and were in favor of reducing personal income tax to 18% or at least to make nontaxable minimum applicable to broader segment of taxpayers, involving also self-employed persons and those who might have GEL 500 or less income per month from renting out space; the proposal was voted down by the Georgian Dream parliamentary majority.