Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698060780798.pdf (Georgia)
SOME ASPECTS OF COMPARATIVE ANALYSIS OF SME STANDARDS IN THE EU AND GEORGIA Natia Kurdgelia PhD doctoral candidate of Economics Science, Kutaisi University, Georgia natiakurdgelia1976@gmail.com KEYWORDS: Small and medium businesses, Taxes, European standards, Regulations J.E.L.

classification: D78, P51, L21 Annotation entrepreneurship, which involves the amount of There are different attitudes towards small own and working capital, number of employees, business definition.
Basically, the laws of the market share, and output, is a small business.

Such countries are based on the criteria on the basis of definitions do not fully reflect its role and place in which this or that enterprise belongs to the small society, as it focuses only on quantitative size and business sector.

However, in EU countries, small not on its qualitative status.
and medium enterprises are considered as small The official definition of small and medium businesses and they are considered in one context.

enterprises in Georgia is partially in line with The concept of small and medium business combines EU standards.

The concepts of small business and number of employees, annual turnover and annual micro business are established only in terms of balance.
The official definition of small and medium tax policy, while in institutional and quantitative enterprises in Georgia is partially in line with EU or qualitative terms its definition is not officially standards.

The concepts of small business and micro definite.

There are quantitative, qualitative and business are established only in terms of tax policy, combined approaches to determinations of the while in institutional and quantitative or qualitative SMEs.
The following criteria are most often used to terms its definition is not officially definite.

classify an enterprise as a "small enterprise" In the worldwide: number of staff, turnover, size of assets, amount of authorized capital, ownership structure.

Introduction There are different attitudes towards small Comparative analysis of SME standards in the EU business definition.
Basically, the laws of the and Georgia countries are based on the criteria on the basis of which this or that enterprise belongs to the The role of small entrepreneurship in the small business sector.

Entrepreneurial entities in development of the economy is great today.

European countries are micro, small, medium and It ensures the growth of the country's GDP, large enterprises.

Georgian law does not define the concept of "small business".
In general, small-scale 113 trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020 is an important area of employment, thus it is are employed, small enterprises employ 10 to 49 contributing to the formation of the middle class; people; In medium enterprises - from 50 to 249 Increases economic and political stability, reduces people and large enterprises with 250 or more poverty and is an effective institution for solving people.

(Tetruashvili…, 2014) social problems.


However, in EU countries, small and medium In addition, small and medium-sized businesses enterprises are considered as small businesses and play a crucial role in business relationships.

they are considered in one context.

The concept of Especially important is the role of small business in small and medium business combines number of the economy for competition and developing large employees, annual turnover and annual balance.

businesses.
businesses.

It ensures the mobile action of large According to the recommendations of the European corporations in the growth of the value chain and Commission of 3 April 1996, organizations with is an effective institution for large companies in less than 50 employees were considered small and the supply-demand chain, the introduction of new medium-sized enterprises; They had an annual technologies and innovations (Chikhladze, 1999:15) turnover not exceeding 7 million.
Euro; Or had an Small and medium-sized enterprises are often annual balance not exceeding 5 million.
Euro; At referred to as "hidden champions" because their the same time, it met the criterion of independence market share is over 50 percent, their goods and (means an enterprise in the capital of which the services are "invisible" or less noticeable, have share of one or more such enterprises, which does a high level of resilience and viability, have a not belong to small and medium business, does not significant export share, are global competitors and exceed 25%).
(Tsetskhladze, 2018:27) large Contribute to the country's success balance.

(Gvelesiani, 1999:220) Georgian law does not define the concept of "small business".

In general, small-scale entrepreneurship, which involves the amount of own and working capital, number of employees, market share, and output, is a small business.

Such definitions do not fully reflect its role and place in society, as it focuses only on quantitative size and not on its qualitative status.

(Tax code of Georgia, 2020).


There are different attitudes towards small business definition.

Basically, the laws of the countries are based on the criteria on the basis of which this or that enterprise belongs to the small business sector.

Entrepreneurial entities in European countries are micro, small, medium and large enterprises.
Small and medium enterprises belong to micro-enterprises, where 1 to 9 people 114 On May 6, 2003, the European Commission adopted the new Criteria for Micro, Small and Medium-sized Businesses, which entered into force on January 1, 2005.

According to this definition, micro, small and medium enterprises are organizations with less than 250 employees, their annual turnover does not exceed 50 million Euros and / or the annual balance does not exceed 43 million Euros.
The EU Commission assesses the development of enterprises in the countries according to the criteria of small and medium-sized businesses.

It is true that these definitions are voluntary for member states, but the EU recommends that this definition be used in the country's regulatory norms, which would be an important step towards harmonization of legislation.
The EU recognizes the priority importance of enterprises of this size in trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020 the economy, according to which it allocates loans 3.

Interconnected enterprises.

These are the and grants through various programs.

companies that make the connections through Calls on institutional investors, regional funds, direct or indirect management of the controlling venture capital companies and local governments stake.
with a budget of less than € 10 million and a The official definition of small and medium population of no more than 5,000 to operate as enterprises in Georgia is partially in line with EU small and medium-sized enterprises; Which will standards.
The concepts of small business and micro allow them to receive grants and be funded through business are established only in terms of tax policy, stocks so as not to lose their autonomy (autonomous while in institutional and quantitative or qualitative enterprise).

( The New SME Definition: 10) terms its definition is not officially definite.
An enterprise is considered autonomous if it There are quantitative, qualitative and combined has 25 or more percent of the shares of another approaches to determinations of the SMEs.

the enterprise and 25 or more percent of its shares do following criteria are most often used to classify an not belong to any other company or state institution.
enterprise as a "small enterprise" In the worldwide: Exceptions are allowed if the 25 percent threshold is number of staff, turnover, size of assets, amount of exceeded by state-owned investment corporations, authorized capital, ownership structure.
venture companies, venture capitalists, universities Prior to January 1, 2011, the Georgian Law on or private nonprofit research centers, institutional Entrepreneurs (1994) and the National Investment investors, including regional development funds, Agency (2006) defined MSS differently from the and local governments.
current Tax Code, which stipulates that the number Thus, the European Commission distinguishes of employees in a small enterprise is no longer valid, three types of enterprises: while the annual Turnover should be less than 100 1.

Autonomous enterprises, which is the most thousand GEL.

The definition of a micro-enterprise common form in practice.

was also established.

2.

Partner companies.


These types involve If we compare the definitions of small and ventures that are financially partnering with other medium businesses in the EU with Georgia, then companies and none of them exercises direct or we will see that there are big differences between indirect control over each other.

them.
115 trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020 Table Small and medium businesses in the EU and Georgia Number of workers Annual turnover carrying amount Enterprise European Union Georgia Medium < 250 < 100 European Union < 50 Million euro Small < 50 <20 <10 million euro micro < 10 1 (From January 2011) <2 million euro Georgia European Union 43 million euro 10 million euro 2 million euro Georgia 1.5 million GEL 500 thousand GEL (Until January 2011) 100 thousand GEL (From January 2011) 30 thousand GEL (From January 2011) Source: The table is compiled by us from https://ec.europa.eu/eurostat , www.geostat.ge and Data on Acces to Finance.
Enterprie and Finance.

European Commission.

http://ec.europa.eu/enterprise/policies/ finance/data/index_en.htm According to the Tax Code of Georgia, the The Tax Code applies special preferential tax regimes criteria for micro-business and small business are to individuals with micro and small business status.

set.
set.

According to the Code, the status of a micro Micro businesses are not taxed with income tax business can be granted to a natural person who does and are exempt from the obligation to use the cash not use the labor of employees and is independently register, while small businesses have a preferential engaged in economic activities, from which his tax regime.

(Tax Code of Georgia, 2020).

total gross income during the calendar year does In agreement with the Finance and Budget not exceed 30,000 GEL.
This status is granted, Committee of the Parliament of Georgia, the revoked and a micro business certificate is issued by Government of Georgia has the right to prohibit the Minister of Finance of Georgia.

Small business the implementation of certain activities, within the status can be granted to an entrepreneur, whose framework of which the status of a small business total income from economic activities during the can not be granted to an entrepreneur.
These calendar year does not exceed 100 thousand GEL.

principles are absolutely in line with European 116 standards and create the minimum institutional conditions for the development of this field.
trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020 Nevertheless, the functioning of markets for The government has declared a liberal economic small and medium-sized entrepreneurs remained course, according to which all sectors of the limited, as due to the structure of the Georgian economy are governed only by free market laws, economy, large entrepreneurs are mainly located the state does not give priority to any sector and in the processing and mining industries, they imposes a uniform tax regime for all enterprises.
are dependent on imported products and use less Under the economic policy course, under the services of local SMEs, which does not provide conditions of equal tax regime, the share of small horizontal way to build relationships.

entrepreneurship in the whole value chain created Reforms in recent years have been reflected in the gradually decreased.
Although the number of positive assessments made by various international registered new enterprises has increased, this has organizations, which are mainly based on the not led to significant changes in the output ratio.

analysis of new laws and legislative changes.


At the Other disadvantages of small and medium same time, the legal and regulatory environment for business development are that small businesses small and medium-sized businesses has deteriorated are not stable and they do not have permanent sharply.

The Law on Support to Small and Medium- suppliers and purchases are relatively expensive.
sized Enterprises and government decisions aimed At the same time, small and medium-sized at state support for small and medium-sized business enterprises find themselves in fierce competition development were repealed.

The government has with foreign enterprises, as a result of which they declared a liberal economic course, according to replace imported products.

Imports have partially which all sectors of the economy are governed only replaced local agricultural and food production.
by free market laws, the state does not give priority (Dzotsenidze, 2014) to any sector and imposes a uniform tax regime for One of the serious barriers to the development all enterprises.

Under the economic policy course, of small and medium enterprises is qualification under the conditions of equal tax regime, the share and experience.

Their knowledge of markets, sales of small entrepreneurship in the whole value chain channels and consumers is insignificant.

In addition, created gradually decreased.


Although the number their knowledge of marketing management and of registered new enterprises has increased, this has tax legislation is low.

Added to this is the fact of not led to significant changes in the output ratio.

pandemic crisis and that only a small number of (Baratashvili… 2012) large and foreign capital are interested in providing One EU study noted that “reforms in recent years services to small and medium-sized enterprises.
have been reflected in the positive assessments We should conclude that this sector needs support.

made by various international organizations, which are mainly based on the analysis of new laws and legislative changes.

At the same time, the legal and Conclusion regulatory environment for small and medium- Main disadvantages of small and medium sized businesses has deteriorated sharply.
The Law business development are that small businesses on Support to Small and Medium-sized Enterprises are not stable and they do not have permanent and government decisions aimed at state support suppliers and purchases are relatively expensive.

At for small and medium-sized business development were repealed (Data on Access to Finance, EC, 2020) 117 trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020 the same time, small and medium-sized enterprises University.
Proceedings of the International find themselves in fierce competition with foreign Scientific-Practical Conference "Economy, Tourism enterprises, as a result of which they replace and Information Technologies, Challenges and imported products.

Imports have partially replaced Perspectives of the Country Development".

local agricultural and food production.

7.


Tax Code of Georgia, One of the serious barriers to the development (Consolidated version2020) of small and medium enterprises is qualification U R L : h t t p s : / / m a t s n e .

g o v .

g e / i n d e x .

and experience.

Their knowledge of markets, sales php?option=com_ldmssearch&view=docView& channels and consumers is insignificant.

In addition, id=1043717 (available: 29.11.2020) their knowledge of marketing management and 8.

Data on Acces to Finance.


Enterprie tax legislation is low.

Added to this is the fact of and Finance.

European Commission.2020 pandemic crisis and that only a small number of URL:http://ec.europa.eu/enterprise/policies/ large and foreign capital are interested in providing finance/data/index_en.htm (available: 29.11.2020).

services to small and medium-sized enterprises.

9.

Georgian Law on Entrepreneurs (1994) We should conclude that this sector needs support.

References: 1.
References: 1.

Chikhladze N., (1999) Taxes, Experience, Problems.

Kutaisi, “Sarkmeli Sakartvelosi” 2.

Tsetskhladze M., (2018) Economic Doctrines.

Batumi, Shota Rustaveli State University Publishing House 3.

Tetruashvili M., Tetruashvili Z., Tetruashvili I., (2014) Own Business: First Steps.

URL:http://www.

nplg.gov.ge/gsdl/cgi-bin/library.exe?e=(available: 29.11.2020) 4.

Gvelesiani R., (1999) SME Success Strategy and Culture.

"Motherland", Tbilisi.

5.


Baratashvili E., Gechbaia B., Glonti V., (2012) Competitiveness of the Georgian Economy: Modern Challenges.

Universal Publishing House.

6.

Dzotsenidze Ts., (2014) Several Aspects of Modern Theories of Business Cycles Kutaisi 118 trjyjvbrehb ghjabkb7 1@_7 @_@_2Economic Profile, N20, 2020