On July 1 2017, a law related to the National Bank of Georgia will go into effect that will forbid businesses from selling the property or offering services with an advertised price in dollars. The law, Chapter V Article 34 of the Organic Law of Georgia on the National Bank of Georgia, states that prices can only be stated in Georgian Lari (GEL). From July 1st, changes will be implemented in the Administrative Offenses Code of Georgia penalizing businesses up to 5,000 GEL for violating the new law.
The changes will first be applied to the real estate market, as this market currently operates almost completely in dollars, as well as the automobile industry. The changes to these markets will limit the right of business owners to choose which currency to use in their operations in order to maximize advantages.
There are varying penalties for violating the new law based on the number of offenses:
- First offense: Official warning to the responsible party
- Second offense: Fine of 1,000 GEL
- Each offense thereafter: Fine of 5,000 GEL
Minister of Finance Dimitri Kumsishvili said that before the amendment enters into force, there will be announcements and advertisements on television notifying the public about the new law.
"The Revenue Service and the Ministry of Finance are working on special marketing videos in order to increase public awareness about this legislation in the public and private sector. Nobody wants the companies to be fined," Kumsishvili said today during an interview with journalists.
The government will establish exceptions where pricing in a foreign currency will not be considered a violation. According to a statement from the president of the National Bank of Georgia, Koba Gvenetadze, there will be exceptions for:
- Any international booking portal and/or foreign website offering travel services, air tickets, and hotel services offered only in a foreign language;
- Tourism services, realization of air tickets and hotel services for non-resident persons on the territory of Georgia, with a guarantee that the offer of the service and advertising is carried out in the national currency;
- International services such as rail transportation and international transportation;
- Roaming services;
- Overseas reinsurance services;
- Services rendered for obtaining and maintaining the rights to trademarks, design, inventions and other rights of intellectual property;
- Exports, imports or transit of electricity, natural gas, oil and water;
- Payment by a non-resident service for fulfillment of supply of goods/services in Georgia;
- Fulfillment of work (supply of goods/services) performed by a resident for a non-resident in the territory of a foreign country;
- Supply and/or provision of goods and/or services within the projects in the energy sector financed by international and/or foreign country’s financial institutions and/or investor;
- The realization of goods and/or services within the activities carried out in the energy sector in the occupied territories of Abkhazia and South Ossetia;
- Fulfillment of obligations and liabilities defined by International agreements and memorandums.