The audit department of the Revenue Service (a legal entity of public law operating under the Ministry of Finance of Georgia) continues its inventory check of TV MR GE, the licensed representative of Nielsen Television Audience Measurement, demanding that the company reveals the addresses of some 330 households where it conducts TV ratings measurements. The disclosure of this confidential information would undermine the activities of the company and of the entire advertising and broadcasting sector. TV MR GE is the only entity in Georgia measuring television audiences - this data is essential for major TV stations to attract advertisers.
Monday evening, TV MR GE received a first fine of GEL 800 for non-complying with the requests of the Revenue Service. The company's management says the firm is facing potential fines of several hundred thousand Lari. TV MR GE says its finance of the previous seven years were audited by the Revenues Service in 2013, and that the company was fined a few thousand Lari for minor violations. Less than a year later, the Revenue Service is conducting another audit - it can be questioned if this is the result of an objective tax fraud risk assessment.
The government auditors are requesting addresses of all households across Georgia where the so-called peoplemeteres - electronic devices that are connected to TV sets to measure the peoples' viewing behavior - are installed. This information is confidential according to verbal agreement between the company and the participants of the survey. The fact that the company owns several hundred of these identical devices is undisputed. It remains unclear how the exact addresses where the devices are located is relevant to assess the company's assets and tax obligations.
In order to protect its confidential information, TV MR GE has offered the Revenue Service to collect devices from households, in order to allow the auditors to check the equipment at the company's office. This option was rejected once again Monday night when, according to the company's management, the audit department tried to go through the company's computers to find this data. When TV MR GE started calling its clients - the country's largest private TV stations - and asked them to observe the process, the audit department representatives left the TV MR GE office, according to a company representative.
The Revenue Service is arguing that the law obliges its auditors to check the company's equipment at the location. But the law 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). Considering that revealing the addresses to investigative bodies will halt the company's activities for several months - it would have identify a new sample of households, as the current selection would be vulnerable to outside interference - 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.
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. Without rating measurements, it is impossible to objectively assess the popularity of TV programs and to provide advertisers and advertising agencies with credible data, which may result in the financial collapse of the television sector.
We believe that the Revenue Service should refrain from actions that will harm the development of free and competitive media market, which is a precondition of a media environment that is free from political bias and control. 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)