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Locating a Business . Locating, acquiring and constructing or rehabilitating real estate for business activities are not perceived as significant problems by either foreign or domestic investors in Georgia. The current system may not pose an overwhelming difficulty for investors because of the low volume of transactions and the institutionalized system of unofficial payments and influence peddling to facilitate the process. However, there are a number of specific areas where regulations, requirements, and procedures need to be clarified, simplified and streamlined. The report includes a number of detailed short and long-term recommendations for strengthening the laws related to the privatization of agricultural land and improving the quality of service provided by the various bureaus responsible for processing the permits necessary for property development and construction in Georgia.
One of the principal recommendations relates to the Law On Privatization of Agricultural Land . The set of laws on privatization of real estate exclude a legal basis for privatization of large agricultural holdings, all of which are presently held under government leases. To the extent that investment in commercial scale agriculture is viewed as having significant potential in Georgia, privatization of larger agricultural holdings is an appropriate next step. A law on privatization of large agricultural holdings is being developed and is an element of the government's longer-term plan for further development of property relationships. [1] Enactment of this law should be a priority.
Operating a Business - Tax Administration . On the basis of interviews with representatives of the private sector, government officials, and technical assistance experts, it appears that the tax administration system is fraught with problems that seriously constrain the activities of private enterprises. The recurring themes voiced by the private sector as being burdensome for business included the complexity of the tax system, the lack of clarity in some aspects of the Tax Code and the sheer number of taxes itself. Foreign-owned enterprises seem to be particularly affected under the existing system. In keeping with the scope of this study, the discussion is focused on taxation administration. Recommendations on tax policy are confined to those issues that directly affect administrative procedures and impede business activity. It should be noted that the International Monetary Fund, the World Bank and USAID are currently providing assistance to the Government of Georgia on taxation policy issues.
The main recommendations include the following (for more detailed discussion of tax issues please refer to the next paragraph - " 1.4 Tax Regime "):
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