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Tax Guide

Financial Year – 1 January – 31 December
Currency – Georgian lari (GEL)

Corporate Tax Summary

Residence – A company is a resident of Georgia if it is a Georgian enterprise or organisation (non-commercial legal person or institution, international organisation). A Georgian enterprise or organisation is defined as having a place of business and/or management based in Georgia. A place of business is the place of its state registration, or in the absence of such a place, the legal address indicated in the founding documents (charter, agreement, regulations). A place of management is the place of effective management, i.e. where, according to the founding documents (charter, agreement, regulations), the board of directors (or any other management body) exercises managerial functions irrespective of the place of business.

Basis of Taxation – Resident companies are taxed on worldwide income with a tax offset for foreign tax paid on foreign income, up to the amount of Georgian tax payable on that income. Non-resident companies are taxed only on income derived from Georgian sources. The basis of taxation for resident companies are: distributed profits, costs incurred or other payments not related to economic activity, free of charge supplies or transfer of funds, representation expenses paid in excess of a limited amount.

The basis of taxation for non-resident companies conducting business in Georgia through a permanent establishment is determined on the same basis as for resident companies, but to the extent of the activity conducted through the permanent establishment in Georgia. A non-resident company earning income from a Georgian source not belonging to its permanent establishment is taxed at source without deductions.

Commercial banks, credit unions, insurance organisations, microfinance organisations and loan providers are taxed on the difference between gross income and deduction amounts until 1 January 2023.

Reference
Corporate Income Tax Rate (%) 15%
Branch Tax Rate (%) 15%
Withholding Tax Rate:
Dividends – Franked 5% There is withholding tax on dividends paid by a resident enterprise to a natural person, a non-entrepreneurial (non-commercial) legal entity or a non-resident enterprise. There is no definition of „franked“ or „unfranked“ dividends, however dividends payed by a resident legal person to a resident legal person are not taxed at source.

Only dividends payed to a resident natural person or non-resident are subject to withholding tax. In addition, dividends received by a resident natural person, which have been taxed at the source, are not included in the gross income of that person and are not subject to further taxation.

0% withholding rate may apply to treaty countries, depending on the country and level of ownership.

Dividends – Unfranked 5%
Dividends – Conduit Foreign Income 5% Dividends received from foreign sources will not be taxed if distributed to a resident legal person (as above).
Interest 5% Withholding tax imposed on payments to a natural person, organisation or to a non-resident having no permanent establishment in Georgia.

0% withholding rate may apply to treaty countries, depending on the country and level of ownership.

Royalties from Intellectual Property 20% 20% tax applies to payments made to a resident natural person. However, if payment is made to a non-resident, 5% withholding tax applies.

0% withholding rate applies to some treaty countries.

Fund Payments from Managed Investment Trusts No specific tax on such payments.
Branch Remittance Tax No specific tax on such payments.
Net Operating Losses (Years)
Carry Back 0
Carry Forward Maximum 5 years and only for those persons who are taxed on their gross income basis.

Individual Tax Summary

Residence – An individual is a resident for the entire current tax year if he/she has actually stayed in the territory of Georgia for 183 or more days in any continuous 12 calendar month period ending in that tax year, or he/she was in a foreign country in the public service of Georgia during that tax year.

Basis of Taxation – Resident and non-resident taxpayers are taxed on Georgian-sourced income.

Filing Status – Each taxpayer must file a separate return each tax year.

Personal Income Tax Rates

Taxable Income Tax Payable – Residents Tax Payable – Non Residents
Any amount of income 20 20

Personal income tax is a flat rate.

Goods and Services Tax (GST)

Rate 18%
Taxable Transactions VAT is tax on any supply of goods and/or services in the territory of Georgia within the scope of economic activity. Input VAT paid by a VAT taxpayer is subject to credit.
Registration Entrepreneurs must register for VAT if their annual turnover exceeds GEL 100,000.
Filing and Payment Anyone registered as a VAT taxpayer must file a VAT return with the relevant tax authority for each reporting period (month), not later than the 15th day of the month following that reporting period. VAT payment must also be within that time frame.

Other Taxes Payable

Tax Reference
Payroll Tax No
Payroll Tax No
Land Tax Land tax is a local tax in Georgia, levied by local governments. The annual basic tax rate on land is differentiated according to administrative-territorial units and land categories. Land tax can be modified by local governments, however it cannot exceed predetermined limits.

Last updated: 26.05.2020

Contact us:

Manging Partner in Georgia
Ivane Kutibashvili
Partner
Phone: +995 32 2 432 281