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Taxation and Customs Union

Overall relations

Customs relations and cooperation between the EU and Georgia are part of the EU's overall political and economic relations with this country. Georgia is a partner country of the Eastern Partnership within the European Neighbourhood Policy. In 2014, the EU and Georgia agreed an Association Agenda.

The Association Agreement between the European Union and the European Atomic Energy Community and their Member States with Georgia, signed on 27 June 2014 and entered into force since 1 July 2016, contains a number of economic and trade cooperation rules, including general provisions on:

- Customs and trade facilitation (Chapter 5, artt. 66-75)

- Taxation (Chapter 3, artt. 280-285)

Trade relations

The EU and Georgia Association Agreement introduces a preferential trade regime, the Deep and Comprehensive Free Trade Area (DCFTA). This regime increases market access between the EU and Georgia based on having better-matched regulations. Georgia has been a member of the World Trade Organisation since 2000 and joined the Pan-Euro-Med Convention on June 1 2018.

Customs relations

Georgia joined the World Customs Organisation in 1993 (October 26, 1993).

The EU and Georgia Association Agreement

  • creates a closer economic integration of Georgia with the EU based on reforms in trade-related areas. It is based on the principles of the World Trade Organisation.
  • removes all import duties on goods and provides for broad mutual access to trade in services.
  • allows EU and Georgian companies to set up a subsidiary or a branch office on a non-discriminatory basis (same treatment of domestic companies).
  • allows Georgian trade-related laws to generally match selected pieces of the EU legal framework (e.g. good governance and rule of law).
  • helps to attract foreign investment to Georgia whilst providing more economic opportunities by expanding the EU market to Georgian goods and services

The EU and Georgia Customs Sub-committee (article 74) reports to the Association Committee in Trade configuration, as set out in Article 408 (4) of the Agreement.

Under the authority of the EU-Georgia Customs Sub-Committee, a Working Group composed of representatives from the EU Commission, interested Member States and Georgia sees to the regular and systematic follow-up of the specific objectives and activities. This activity is assigned to the Georgia Strategic Framework, which establishes appropriate work programmes or roadmaps and organises monitoring and evaluation mechanisms.

Within the Commission:

- TAXUD is in charge of the management of the customs and taxation section of the Agreement

- OLAF deals with anti-fraud issues

Rules of Procedure

Tax relations

The EU and Georgia Association Agreement

  • Enhances good governance in the tax area, with a view to the further improvement of economic relations, trade, investment and fair competition
  • Commitment to implement the principles of good governance in the tax area, i.e. the principles of transparency, exchange of information and fair tax competition, as subscribed to by Member States at EU level.
  • Provides for gradual approximation of the indirect tax legislation to the EU, namely the EU legislation of VAT and excise duties.

Background information

The EU is the main trade partner of Georgia, followed by Canada, Turkey and Russia, while the EU trade with Georgia accounts for 0.1% of its total trade:

EU-Georgia: Trade in goods

georgia-trade.png

EU-Georgia: Trade in services

georgia-trade-1.png

Source: DG Trade, Date of retrieval: 22/04/2020

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