Recent amendments to the Georgian Tax Code (Article 239) and, respectively, to the law “on Enforcement Proceedings” (Article 823) change the way that the priority of liens is calculated. A lien is a claim on a debtor's property in order to ensure payment of a debt; a mortgage is a type of lien. The amendments would give tax liens priority over liens held by banks to secure loans, in certain situations. Prior to the recent amendments, the priority of a tax lien was based on the date on which Georgia's Tax Authority registered a lien against a taxpayer's property. For example, if a person took out a loan in 2009 (thereby giving the bank a mortgage against the property used to secure the loan), and the Tax Authority registered a lien against the same property of the same person in 2010, then the bank's lien (i.e. the mortgage) would have priority. Assuming the person did not pay their tax debt, their property would be compulsorily sold at auction to satisfy the tax lien. However, because the bank's mortgage would have priority, any proceeds from the sale would go toward paying off the mortgage, and the Tax Authority would only receive income from the sale if the proceeds exceeded the amount of the loan secured by the mortgage. After the recent amendments, however, in cases like the above example, where a bank-held lien might take priority over a tax lien, the date of the tax lien, for priority purposes, will be the date on which the underlying tax obligation arose. This might be several years (up to 6) before the date the bank's lien was registered. This might give some tax liens priority over bank’s lien in cases where the bank’s lien would have had priority under the old rule. For instance, in the example above, if the tax debt arose in 2008 (because the person did not pay their taxes in that year), then the tax lien discovered and registered by the Tax Authority in 2010 would take priority over the bank lien registered in 2009. This change increases the risk to all Georgian financial institutions which hold mortgages, because there is now the possibility that their mortgages will be superseded by a tax lien discovered by the Tax Authority after the bank mortgage was made, even if the debtor had no tax obligations at the time the bank mortgage was made. We assume that if lending institutions expect this provision of the law to be enforced equally for all financial institutions, then based on economic theory, there will be an increase in mortgage interest rates to compensate for the increased riskiness of new mortgages. However, at this point, it is too early to argue that this will happen in Georgia.