GEORGIA Country Profile

Customs Administration

Business Corruption

Although more than 7,000 products may be imported duty-free, companies still encounter customs officials who are charging some kind of unofficial customs fee (either for value or for volume). This trend is confirmed by the World Bank & IFC Enterprise Surveys 2008 in which a significant percentage of companies report that they expect to give gifts in order to secure an import licence.

According to Global Integrity 2008, corruption in customs administration is still a problem, although a diminishing one. The report details certain instances of corruption in relation to customs, but also reports that customs and excise laws are enforced uniformly and without discrimination. The new Georgian Customs Code came into effect 1 January 2007 and was supposedly streamlined to meet EU customs legislation. However, the new regulations have led to some confusion both by companies and by customs officials. Companies are sometimes fined due to misunderstandings of customs regulations by customs officers who fear losing their jobs should they not enforce regulations. Companies typically prefer to pay the fines rather than be drawn into lengthy, costly arbitration procedures. According to the US Chamber of Commerce 2008, companies in Georgia indicate that the simplification of national customs legislation would make the biggest positive difference to customs administration in Georgia.

Political Corruption

High-level embezzlement and fraud is allegedly still taking place in relation to the customs department. A Member of Parliament had to resign because he was suspected of illegal business dealings involving conflict of interest and corruption. He was accused of holding shares in a privately-owned customs terminal. Furthermore the terminal was located near a well-functioning state-owned terminal, which went bankrupt shortly afterwards. The bankruptcy is suspected to have been orchestrated by high-level officials with private interests in customs terminals.

Frequency

The World Bank & IFC: Doing Business 2010:
- A standard export shipment of goods requires 4 documents, takes 10 days and costs USD 1,270 per container.

- A standard import shipment of goods requires 4 documents, takes 13 days and costs USD 1,250 per container.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the efficiency of customs procedures (formalities regulating the entry and exit of merchandise) in Georgia a score of 4.6 on a 7-point scale (1 'extremely inefficient' and 7 'extremely efficient').

US Chamber of Commerce: Investment Climate, Transport & Trade Facilitation 2008:
- Little less than 40% of companies indicate that unofficial 'taxes' or bribes are required to clear customs; the remainder indicates the opposite.

- Nearly 20% of companies indicate that the level of corruption in customs is high/very high.

The World Bank & IFC: Enterprise Surveys 2008:
- 12% of the trade companies surveyed identify Georgian customs and trade regulations as a major constraint on doing business.

- Nearly 43% of companies expect to give gifts to obtain an import licence.

Transparency International: Global Corruption Barometer 2005:
- Citizens give customs a score of 3.6 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').