has a standard VAT rate of 18%
that applies to certain taxable transactions
, depending on the business field and the commercial activity of the Georgian company
. The value added tax (VAT)
is just one of the applicable taxes for companies in Georgia
and certain taxpayers
in the country must be registered for VAT purposes
. The registration for VAT
can be voluntarily and it is also compulsory in certain cases. Our company formation agents in Georgia
can help you register your company for VAT purposes
Taxable transactions in Georgia
Certain activities are regarded as taxable transactions
and they are subject to the 18% VAT rate
. This is applied to most of the goods and services traded on the Georgian market
and our team of consultants in company formation in Georgia
can offer in-depth advice on any matter related to the payment of the VAT
. This VAT rate
is applied to the following:
- • the supply of goods or services produced and delivered on Georgian territory;
- • the transfer of goods and services for non-economic purposes (if the taxpayer has a VAT credit for these goods or services);
- • the transfer of goods or services in exchange for shares in a Georgian legal entity or partnership;
- • the supply of goods or services by a taxpayer to its employees, the export of goods outside Georgia and the import of goods into Georgia.
The standard VAT rate in Georgia is 18% for all imports and taxable transactions, unless otherwise defined in a specific agreement or provision. Some transactions are exempt from the tax without the right to reclaim input VAT. Our company incorporation agents in Georgia can give you complete details regarding the VAT obligations for each business activity.
VAT registration in Georgia
A company in Georgia
can become a VAT payer
if it is registered voluntarily for this purpose or if its activity falls into the category of businesses that must register for VAT purposes
. Compulsory VAT registration
is required for taxpayers
who, in a period of 12 months, perform economic activities that have an accumulated value of VAT taxable transaction
that exceeds GEL100,000. At the same time, this is necessary for companies that produce or import excisable goods into Georgia
or for legal entities established after a reorganization.
When is VAT applied in Georgia?
The VAT in Georgia is applied to a taxable transaction at specific moments. For example, in the case of the imports of goods, the VAT is charged on the customs value of the goods declared by the importer. The customs value is calculated taking into consideration the economic value of the goods, the value of the transportation, the customs duties and the excise tax (if applicable), as per the customs legislation available in Georgia.
According to the country’s Tax Code
, the VAT is chargeable
on a taxable transaction
at the moment in which the supply of goods takes place. Several exemptions are allowed and our team of consultants in company registration in Georgia
can provide an extensive presentation regarding this aspect.
Businessmen who want to open a company in Georgia
should also know that the Tax Code
prescribes that the payment of the VAT
is imposed to any taxable transaction
that occurs on the country’s territory, unless there are specific exemptions that are applicable. In the cases in which the transaction occurs between two parties located in different countries (in Georgia
and another jurisdiction), the place of the taxable transaction
should include the following:
- • the place of registration where the recipient is a tax resident;
- • the place of management declared by the recipient or the location of its permanent establishment;
- • the regulations are also available for the supply of services (also referred to as intangible assets);
- • intangible assets can refer to consulting services, engineering, legal or accounting services, advertising, but it can also refer to telecommunication, radio or television.
When should a company issue a VAT invoice in Georgia?
Companies registered for VAT purposes in Georgia
must issue specific documents regarding the supply of goods or services delivered here. In this sense, it is legally required to issue VAT invoices
to the company’s clients in a period of maximum 30 days; this is a document that is strictly regulated by the Ministry of Finance in Georgia
, which provides an evidence on the financial transactions that are charged with the VAT
Are there any other important matters concerning the Georgian VAT?
Yes, the legislation concerning the VAT
is extensive and covers a wide range of matters. Our team of specialists in company formation in Georgia
can offer in-depth information related to the overall tax legislation
applicable to the payment of the VAT
. However, it is necessary to know the following matters:
- • according to the provisions of the Tax Code of Georgia, the VAT does not apply to money (Article 13.2) or to hired workforce (Article 16.2).
- • Article 57 of the same rule of law stipulates that, in the case in which a person is a heir of another person who has conducted a business activity in Georgia and who was a VAT taxpayer, but who passed away, the said person will become a VAT payer, provided that he or she will continue the company’s economic activity;
- • a heir of a business charged with VAT is entitled to obtain VAT deductions, provided that he or she can prove this right through various company documents;
- • overpaid VAT can be refunded to a taxpayer if certain conditions will apply.
VAT refunds can be obtained on the amount of overpaid VAT in a period of one month since the day in which the taxpayer filed an application (Article 63) in the situation in which the party exported, purchased or imported fixed assets that fall under the definition of the Article 111 of the Tax Code or if a company purchased various goods useful for manufacturing fixed assets included in a specific category (Group IV of the Article 111).
What are the VAT obligations for Georgian small businesses?
Businessmen who want to open a company in Georgia
categorized as a small business have to comply with several requirements. Thus, when a company that is represented by a natural person is considered a small business and when the company becomes liable for the payment of the VAT,
the businessman has to register as per the provisions of the Article 157 of the Tax Code
. Also, the company is required to register its inventory balance available at the moment when the company became liable for the payment of the VAT
Businessmen producing and trading excisable goods on the Georgian territory
have to register for VAT purposes
with the local tax authority
prior to starting the supply of goods. Other conditions for registration may apply. Our company incorporation agents in Georgia
can tell you more about other cases in which VAT registration
is compulsory. Also, we can help you submit the necessary documents for VAT registration
with the Georgian tax authorities