The bill became active at the end of last month. The bill also defines a decentralized currency as follows:
“Cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”
Following the approval of the bill, the residents of Georgia can exchange cryptocurrencies for fiat currency without worrying about the transaction being subject to VAT.
Khaduri, however, highlighted that Georgian lari will be the only legal tender in the country and the cryptos will be treated in the same manner as overseas fiat currencies.
This implies cryptos will not be allowed for payment of goods and services.
Notably, the bill does not provide any waiver to mining companies which have domestic registration. As only overseas mining company is excluded from tax, may companies with local registration may move out of the country soon.
It can be remembered that the EU Court of Justice passed a judgment in 2015 excluding Bitcoin exchange from VAT.
Regarding the EU court’s ruling, Stefano Capaccioli, an Italian lawyer specialized in gold and cryptocurrencies, said
“The Decision is of historic importance: it clarifies all doubts and removes the confusion on the applicability of consumption taxes to bitcoin, considering cryptocurrencies as a simple means of payment and, under a VAT perspective, similar to a foreign currency. […] The Judgment is the practical demonstration that bitcoin needs no specific regulation, but only the interpretation of existing legislation because bitcoin does not fall in any legal vacuum.”