A Tax Registration Fairy Tale Comes True

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09/20/2008
people wait in long lines for tax registration
BEFORE: Disorder, delay, and confusion were common practices when Georgians tried to register to do business legally. Bribery was one common way to cut through the chaos; another was to stay in the shadow and avoid registration altogether.

Tariel Chanturia, one of Georgia’s most renowned poets, faced an unexpected obstacle to publication of his newest poems.  David Gotsiridze, Director of the printing house Kedeli, explained that Chanturia would have to first register as an individual entrepreneur before publishing his new volume.  Despite Gotsiridze’s assurance that the process would be fast and simple, Chanturia expected the worst – confusing procedures, long lines, multiple visits, and unofficial payments.  When he walked into the tax inspectorate, Chanturia thought that he must have come to the wrong place. Delighted, Chanturia noted that instead of chaos, there was no line “and the official asked how he could help me.”  

Registered immediately, Chanturia reached his hand into his pocket to pay the expected “gratuity.” The tax inspector refused and told him the service was free. “A fairy tale!” Chanturia exclaimed, “How could registration happen so easily? A couple of years ago it would have taken all my lifetime, nerves, and half of my honoraria.”

Before: People wait in long lines to register

BEFORE  Disorder, delay, and confusion were common practices when Georgians tried to register to do business legally. Bribery was one common way to cut through the chaos; another was to stay in the shadow and avoid registration altogether.

AFTER: "one window" service has reduced lines and wait times

AFTER “One-window” service has reduced the time required to register to do business in Georgia from days to minutes.  A series of reforms implemented since 2006 have streamlined procedures and reduced costs, both for individual entrepreneurs like Tariel Chanturia (see text on the left), and new companies.  Now, just one visit to the local Tax Inspectorate is required for all.  The reforms, implemented by the Ministry of Finance and State Revenue Service with support from USAID Business Climate Reform, have been followed by sharp increases in registration and revenues.  Taxpayer registration rose 269 percent from 2005 to 2007, while total tax revenues collected in 2007 equaled $3.15 billion, an 82 percent increase over 2005.