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Parliament to Consider Amendments to the Law on Free Tourist Zone in the Spring

Work on  the amendments  to the  law on facilitation of a free tourist zone development is  still underway. Ministry of Economy will submit the bill to Parliament in the spring session.
The Ministry expects that next year changes will already be enacted that will give investors additional terms to  fulfill obligations in the free tourist zones and construct  hotels. The Ministry of Economy is working on the changes along with the Government of Adjara.

We are talking about obligations overtaken by investors to build hotels  in 2010 after the enactment of the law  on Free Tourist Zone Development which  they could not fulfill.

According to Shalva Alaverdashvili , founder of Georgian Hotel and Restaurant Federation, postponement of  the terms will give additional impetus to investors and will allow to avoid fines.

When asked what should be done to ensure that the operation of the  free tourist zones, Alaverdashvili replies that the government must work to attract investors, however, it will be very difficult because of the current tax legislation for  the hotel and restaurant business.

In  the words of Alaverdashvili,  he has long asked  to  impose taxes and other types of benefits for the hotels on a seasonal basis which would give incentives for foreign investors to enter the Georgian hotel business.

The Ministry of Economy explains the extension of terms for investors by the government unfulfilled obligations. According to them, in some cases the provision of infrastructure works prescribed by law  was delayed – conduct of gas, electricity, water and other communications to the hotels. Proceeding from all aforesaid,  the investor were unable to meet the deadline.

It is unknown for how long the term for investors  has been extended, possibly it will last for several months.

According to the amendments, the hotel’s and its compatible activities are  expanded. If the hotel wants to launch a recreation complex, such as a cafe or  spa center, special licenses will not be  needed for this.

The bill on facilitation of a free tourist zone development will be ready by the end of December. The Ministry of Economy expects that the law will be presented in  the spring session of Parliament.

Tourist zones law was enacted in 2010. To date, Anaklia, Kobuleti and Ganmukhuri were granted a status of the free tourist zone.

The collapse of the tourist zone project   was recognized by  the former government yet.

The new government also said that despite the efforts, investors were nor  interested in the free tourist zones. However, they also noted that the status of free tourism zones will be retained  and the project will not be abolished.

According to the law, businessmen, who will invest at least GEL1 million in hotel construction in Kobuleti and sustain the hotel profile during 15 years, will be exempted from the property and income taxes for the equal period. The construction sites will be handed to such investors for symbolic price as of GEL1. Government will ensure organization of the adequate infrastructure for the hotels and leisure complexes with the purpose of fostering development of the corresponding project.