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Taxation in Georgia

Updated on Thursday 12th March 2020

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Taxation-in-Georgia.jpgTaxation in Georgia is one of the most advantageous in the Caucasus region. The country has low tax rates, few applicable taxes for companies and individuals and special favorable tax regimes for certain foreign investments.
 
The tax and customs legislation is included in the Tax Code and the supervisory authority for tax collection is the Georgia Revenue Service. If you are interested in company formation in Georgia, our experts can help you comply with the tax requirements.
 

Taxes in Georgia

 
Taxation in Georgia is territorial: only income received from Georgia sources is taxed. Georgian companies are taxed on their profit produced in the country. The taxes imposed in Georgia are:
 
- the corporate profit tax of 15%;
- the value added tax of 18%
- the personal income tax: 20%
- the import tax: with differentiated values of 0%, 5% or 12%;
- the property tax: up to 1%.
 
A tax rate of 5% applies for dividends and interest. The property tax is levied on a local level while all other taxes are national. Georgia does not impose a payroll tax, social security contributions, capital gains, wealth or insurance tax.
 
Individuals in Georgia are subject to the personal income tax levied on their Georgian-source income. An individual is a tax resident in Georgia if he or she spends more than 183 days in the country during a 12 month period.
 
Foreign investors in Georgia benefit from an extensive double tax treaty network signed with more than 47 countries. The Free Industrial Zones in Georgia have special tax rates and benefits for enterprises that operate within the designated areas.
 
Our company registration agents in Georgia can help you with detailed information about taxation in Georgia, according to the type of company and business you perform.
 
Georgia’s secret to economic success lies in its low taxation and openness towards foreign investors. The country has been working on investing in key areas over the years and has never stopped encouraging business owners to open companies there. The reforms imposed in the country lead to the creation of a favorable market environment and, thanks to this careful planning and attention, Georgia is the country of choice for investors in numerous business areas.
 
While investing in Georgia may be facile, our Georgian company formation experts are qualified to assist and help you with information about taxation in Georgia and any legal or corporate issues. 
 

Ease of doing business in Georgia

 
Georgia is a country recognized for the ease of doing business as well as for its economic freedom. It also scores very well for lack of corruption and the public perception of the decrease of corruption is among the largest in the world.
 
One of the country’s greatest advantages for investors remains its low-tax regime. The country has implemented a three phase tax reform that started in 2004 and ended in 2011. With careful planning and by going through some essential steps, Georgia has managed to create an attractive taxation regime.
 
Foreign investors who choose Georgia as their gateway to a number of important markets can request the specialized services of our Georgian company incorporation experts.
 

Tax reforms in Georgia 

 
The first phase of the tax reform in Georgia took place between 2004 and 2007. The country began by fighting corruption and making some basic institutional changes. The second phase, from 2007 to 2009, aimed to improve institutional capacity and further reduce the tax burden. The third and final phase, which took place between 2010 and 2011, began with a comprehensive policy reform and a reduction in tax compliance costs, among other measures for customs and other services.
 
The total number of taxes in Georgia was reduced, over the years, from 21 to just 6. The VAT rate dropped from 20% to 18% and the corporate tax also decreased from 20% to 15%. Moreover, Georgia managed to abolish social security contributions.
 

Tax compliance in Georgia

 
Any company in Georgia must be registered with the National Agency of Public Register of Georgia. After registration, a tax number is assigned to the legal entity. Tax returns in Georgia have due dates according to the type of tax. Taxpayers can request an extension of the deadline for submitting the returns. Fines can apply for late payments.
 
As a foreign business owner in Georgia, you may be liable to certain taxes, other that the corporate tax or the personal income tax. The republic of Georgia is a country that is constantly improving the taxation system and the rules and regulation for international executives in Georgia do not impose numerous taxes for the individual. Our Georgian company formation experts can help you understand taxation in Georgia and prepare a good tax planning strategy. 

Taxes for an international assignee in Georgia

 
Georgia is a country that has a good geographical location and many foreign business owners open import companies or transport businesses here. As a non-native living and working in Georgia, you will have to pay certain taxes, most the income tax. Residents and non-residents in Georgia are only taxed on their income produced in Georgia. For this purpose, a resident is considered an individual that lives in Georgia for more than 183 days during one tax year.
 
If you own property in Georgia as a foreign business owner here, you will have to pay the real estate tax. This is applicable on buildings, constructions or parts thereof owned by an individual. The tax level is calculated according on the income level for one year. For example, households that produce a total income per year below 40,000 GEL are exempt from the real property tax. The tax rates for other incomes range from 0.05% to 1% of the market value of the property.
 
Corporate gifts in Georgia are exempt from taxes, provided that they have a value below 1,000 GEL and if they are not received by employers. Gifts to first and second degree relatives are also tax exempt but those to other relatives are exempt only up to a certain amount.
 
Our Georgian company formation experts can help you calculate and submit any tax returns.


The free industrial zones in Georgia

 
Georgia has an important geographical advantage - its location near the Black Sea that makes is an alternative route to Central Asia. The free industrial zones were developed as part of a strategy to attract investors in Georgia and they are special areas located in key parts of the country, where an international enterprise can exist and benefit from special status regarding the taxation system. The key is for this type of company to provide goods or services within a clearly defined free industrial zone. Our Georgian company formation experts can help you understand how business activities are conducted and regulated within these special investment zones.
 
Another business that benefits from incentives in Georgia is the so called free warehouse enterprise - a warehouse that has a confirmed special status and sells foreign goods. These establishments are exempt from profit tax on the income received from re-exporting. 
 

Investment incentives in Georgia

 
One type of Georgian company that benefits from investment incentives is the international financial company. This type of financial institution conducts business with partners outside of Georgia and is located outside a free industrial zone. Nevertheless, it benefits from exemptions from profit tax for the profit received from the provided services, the dividends paid and the gains derived by individuals who have sold securities issued by such a company.
 

Taxation for international workers in Georgia 

 
It is not uncommon for international branches or subsidiaries, belonging to big corporations, to hire foreign employees in Georgia. Expatriates in Georgia are taxed only on their income that is produced in Georgia, as opposed to residents who are taxed on their worldwide income.
 
This can be advantageous for international executives in Georgia. The income tax rate is fixed at 20 percent, but there are some cases when the rate is only 5 percent. The cases in which this tax is lower include the type and source of the income and/or the status of the employee. Our Georgian company incorporation experts can give you detailed information about the cases in which the exceptions for the lower rate apply.
 
The personal income tax rate is fixed and does not depend on the total amount of the income received by the employee.
 

Special rules for expatriates in Georgia 

 
When working in Georgia as a foreigner, an individual has to take some aspects into consideration. Short-term employees in Georgia (those who work in the country for less than one year) do not have to observe any special residency rules or mind any payroll considerations. 
 
Non-residents working in Georgia still have to observe the same rules for filing tax returns as any other employee.
 
For more information about taxes and tax compliance you can contact our company formation agents in Georgia
 
 
 

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