Revenue Service involves Court, seeking to obtain household addresses of TV ratings firm
The audit department of the Revenue Service continues its excessive check of TV MR GE, the licensed representative of Nielsen Television Audience Measurement, further raising questions about the true motives of the tax and inventory checks. After failing to receive the confidential information – the addresses of some 330 households where the company conducts TV ratings measurements – through an inventory check, the state entity is now trying to get these data via the Tbilisi City Court.
On Monday, following intensive tax and inventory checks, Revenue Service representatives entered TV MR GE with an office check deed, demanding access to a folder containing hard copy documents with information on the families involved in the research panel, including the families’ addresses. The company representatives claim the folder with these documents contain demographic data on the participant family members and are in no way related to TV MR GE’s finances and are hence completely irrelevant for the tax and inventory check. However, after the company’s refusal to hand the folder with documents to the Revenue Service, the government auditors have turned to the Tbilisi City Court, requesting access to the documents. The court is expected to rule on the case on Friday.
The Revenue Service is arguing that a decree issued by the Minister of Finance in 2010 obliges its auditors to check the company’s equipment at the location the assets are located at. But the Tax Code also clearly requests from the tax investigative bodies that investigative procedures shall not undermine the company’s activities (Article 255, paragraph 3 of the Tax Code of Georgia). Given that the tax checks have already interrupted the company’s activities and that revealing the addresses of the sample households to investigative bodies would require the company’s to cease its operations for several months in order to replace its whole household selection, it appears that the Revenue Service’s approach is in violation of the Tax Code – which is legally superior to any ministerial decree.
Above all, a close look at the 2010 decree shows that this document doesn’t provide separate rules for the inventory check of fixed assets (which the peoplemeters clearly are) that would be in line with international audit and other applicable standards. This has resulted in a legal loophole, which allows the Revenue Service to interpret the decree in such a way that they can demand an inventory check of fixed assets such as peoplemeters on location.
In line with International Standards on Auditing and other applicable standards, peoplemeters that are in use by the company are considered fixed assets, not inventory, and do not have characteristics that would pose a high risk of misappropriation. Nor do they contain data that can help calculate tax liabilities. Therefore, per International Standards on Auditing and practice derived from the standards, peoplemeters do not need to be checked at locations where auditor attendance has not been previously announced and thus can be moved around for physical inventory count.
TV MR GE is the only entity in Georgia measuring television audiences electronically (a number of commentators on this case have confused the company with a polling firm) – this data is essential for major TV stations to attract advertisers. If any interested side, including the Government of Georgia, were to have access to the addresses of households, there is a risk that the rating results will be influenced or manipulated, including by households exercising self-censorship by avoiding to watch critical channels, fearing repercussions.
We once again call on the Revenue Service and the Ministry of Finance to agree to procedures that would not put the company’s existence at risk and not undermine ongoing process of audience measurement which is a determinant for financial sustainability of TV media. An unreasonably harsh approach will also undermine public trust in the independence and professionalism of the Revenue Service.
Transparency International Georgia
The International Society for Fair Elections and Democracy (ISFED)
Media Development Fund (MDF)
Human Rights Education and Monitoring Center (EMC)
Civil Development Agency (CiDA)