06TBILISI2935, FINANCE MINISTER HEARS USG RECOMMENDATIONS FOR

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Reference ID Created Released Classification Origin
06TBILISI2935 2006-11-02 14:02 2011-08-30 01:44 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Tbilisi

VZCZCXYZ0002
RR RUEHWEB

DE RUEHSI #2935 3061402
ZNR UUUUU ZZH
R 021402Z NOV 06
FM AMEMBASSY TBILISI
TO RUEHC/SECSTATE WASHDC 4551
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS TBILISI 002935 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/CARC AND EUR/ACE 
COMMERCE FOR 4231 DANICA STARKS 
TREASURY FOR OIA 
 
E.O. 12958: N/A 
TAGS: EFIN EAID GG
SUBJECT: FINANCE MINISTER HEARS USG RECOMMENDATIONS FOR 
REVENUE AGENCY MERGER AND IMPROVING TAX COLLECTIONS 
 
REF: TBILISI 2749 
 
1. (U) On October 25, Econoff presented Finance Minister 
Aleksishvili with a non-paper on consolidation of the GOG 
revenue agencies (the tax administration, the customs service 
and the financial police) that the Ambassador gave to PM 
Noghaideli at their meeting on October 13 (reftel).  Econoff 
also gave Aleksishvili a copy of a letter that Paul Sunkes, 
the Treasury-funded USG advisor to the tax administration on 
collections issues, sent to Aleksishvili in September. 
Sunkes' letter contained final words of advice, since his 
program has now ended.  Econoff stressed that the USG 
suggestions for the reorganization of the revenue agencies 
stemmed from our several ongoing programs of assistance for 
all three agencies and an INL-sponsored conference in Gudauri 
that focused on cooperation among the agencies, as well as 
concerns voiced by the local American Chamber of Commerce. 
He stressed that the main need is for written, coordinated 
regulations that allow the tax and customs authorities to 
develop cases and refer them to the financial police, rather 
than having the financial police driving enforcement efforts. 
 He also reminded Aleksishvili of the concerns expressed by 
the revenue agencies about the threat of criminalization of 
their good-faith decisions by the financial police. 
 
2. (U) Aleksishvili told Econoff that the consolidation 
process was going well, that legislation is being drafted and 
that it should be enacted by parliament in December. The 
actual implementation of the merger will take place in early 
2007.   He said that the decision of who should run the new 
agency has not yet been made.  He admitted that he had heard 
rumors the new revenue agency will be headed by the financial 
police and that the business community is not happy about 
that.  He said that the decision of who will head the agency 
is a political one that will involve the Prime Minister and 
the President.  He said he understands that the leadership of 
the new agency will set the tone for its activities, and he 
supports the concept that customer service, rather than 
police enforcement, should become the theme of the tax system 
under the combined revenue agencies. 
 
3. (SBU) Econoff also explained Sunkes' strong recommendation 
that the government use authority it already has under law to 
create imputed tax returns for persons who have not filed any 
return at all, based on information available to the agency 
from past returns or independently-acquired information. 
This action is intended to force the taxpayer to file a 
return to contest the tax assessment.  Once Aleksishvili 
understood what Sunkes is talking about, he brightened at the 
idea.  Although Sunkes' letter has been in Aleksishvili's 
possession for some weeks, he did not seem to have focused on 
it until this meeting. 
 
4. (U) Copies of the Embassy non-paper on consolidation of 
the revenue agencies and the Sunkes letter are being faxed to 
EUR/CARC. 
TEFFT

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