The Economic Policy Committee convened to discuss the proposed amendments to the Tax Code of Georgia at its recent session.

According to the Parliament’s press service, Shota Berekashvili, Chair of the Economic Policy Committee and one of the primary authors of the draft legislation, outlined the key amendments to the tax code.

He explained that the proposed changes aim to achieve three main objectives: to promote local cigarette production, to establish a fair and balanced excise rate for importers, and to generate a positive fiscal impact for the state budget.

“The share of locally produced cigarettes has been declining year on year and now constitutes only 5-6% of the market. At the same time, up to 1,000 households in Georgia are engaged in tobacco cultivation. Additionally, around 1,000 citizens are involved in the production process itself. Under equal tax conditions, local producers lack the resources to compete effectively with imported goods. Consequently, the share of domestic products is expected to decrease further, ultimately leading to imported cigarettes replacing locally produced ones entirely. This would mean the loss of income and employment for up to 1,000 households,” Mr Berekashvili stated.

To prevent the complete disappearance of local cigarette manufacturing, he suggested establishing a preferential excise rate for domestically produced cigarettes within a limited volume. This would cover 35 million packs of local cigarettes, with an excise duty fixed at GEL 1.3 per pack, and an ad valorem rate set at 15%.

Regarding imported cigarettes, the draft proposes increasing the fixed excise duty from GEL 1.9 to GEL 2.75 per pack, whilst reducing the ad valorem rate from 30% to 20%.

The committee chair elaborated on the fiscal implications of these changes within the state budget.

“Raising the fixed excise duty by 85 tetri will bring in an additional 85 tetri to the budget for each excise stamp issued. Meanwhile, lowering the ad valorem rate to 20% will balance inflationary pressures and reduce the excise tax paid by manufacturers and importers by an average of 65 tetri. Overall, these adjustments will generate an extra 20 tetri in revenue for the state per excise stamp,” Mr Berekashvili explained.

The committee unanimously supported the proposed amendments to the Tax Code.