Czech Parliament places Georgia’s EU Association Agreement on hold over energy tax dispute

Russia's President Vladimir Putin (R) and IOC President Jacques Rogge attend an IOC executive board meeting at the SportAccord International Convention in St. Petersburg, on May 30, 2013. AFP PHOTO / POOL/ KIRILL KUDRYAVTSEV (Photo credit should read KIRILL KUDRYAVTSEV/AFP/Getty Images)

Georgia’s EU Association Agreement has been withdrawn from the Czech parliament by the country’s Foreign Ministry until April 1.

The reason for the Czech Republics hold on Georgia EU Association Agreement…a dispute between Czech company Energo-Pro’s and the Georgian Ministry of Finance over the budgetary debt of the Czech company.

Czech Energo-Pro is the biggest foreign investor in Georgia. It runs 15 hydroelectric power stations and distribution companies in Georgia and has about one million customers.

The Georgian tax office has imposed a special tax of $60 million on Energo-Pro. Energo-Pro balked at the payment and is now in negotiations to reduce the tax amount, with the Georgian tax office ready to give up 70 to 80 percent of its claim, according to Jiri Krusina, one of Energo-Pro’s owners.

Sputnik News Agency reports…

The Georgian side intends to obtain about $60 million from Energo-Pro, according to Georgian mass media reports, with reference to the Czech media.

Czech Foreign Minister Lubomir Zaoralek has confirmed that his ministry had withdrawn the issue and claimed that otherwise the deputies would have failed to ratify it, according to Russia’s newspaper Kommersant. The three-week suspension gives the respective parties the chance to settle the dispute before the ratification.

A former advisor to Georgian Prime Minister Georgy Huhashvili complained that the Czech Republic is resorting to what he called indecent means.

“It is simply blackmail, the gravest interference into [the country’s] internal affairs, and [signifies] absolute disrespect towards our country,” Kommersant quotes him as saying.

The former head of the Georgian Diplomatic Academy, Iosif Tsintsadze, has said that in the event of any complaints against Georgian tax authorities or the country’s Foreign Ministry, the Czech company should seek international arbitrage instead of manipulating the agreement with the EU.


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