Reinvestment benefits for businesses - Exclusive

Reinvestment benefits for businesses - Exclusive

The volume of business reinvestment according to the Estonian model does not exceed GEL 250 million. This means that companies refused to reinvest their profits. According to the Government the amount should have been GEL 400 million. According to official statistics, the amount of profit tax in the budget for past two years is reduced with GEL 243-245 million. According to economists this is the amount that the budget has lost due to reinvestment.

As of 2016, before the Estonian model the amount of profit tax in the budget was GEL 1 billion. In 2017 this number dropped to GEL 757 million, the trend continued into 2018 and the profit tax amounted GEL 737 million. Specialists say the only reason can only be reinvestment.

If we look at the statistics, it is clear that the Government's plan for the Estonian model has failed. The reason, according to Avtandil Silagadze, the Academic is distrust of Lari, which has affected business decisions.

“It seems that the business needed to make a profit today before investing money. This is not surprising, as the national currency is in fluctuations and the risk for business is quite high", Silagadze said.

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