Tax Guide in Georgia:
Types of Taxes, Rates, and Payment Deadlines
A handy guide to Georgian tax legislation: what taxes exist in Georgia, who pays, when, at what rate
Anna Davidson, founder and managing partner of JUST Advisors
14 July 2024
The JUST Advisors experts have put together an easy guide on Georgian tax legislation: what types of taxes exist in Georgia, who needs to pay them, when and at what rates. The guide also covers the potential consequences taxpayers might face if they fail to file a tax return or pay taxes on time. Its goal is to help you feel more at ease and informed if you’re required to pay taxes in the country.
Tax system in Georgia
The Tax Code of Georgia establishes 6 types of taxes:
1.income tax (also known as Personal Income Tax, or PIT in other legislation system)
2.value added tax (VAT);
3.Property Tax
4.profit tax
5.excise tax
6.import duty
In this article, we will take a detailed look at the first five taxes and also examine 2 subtypes of taxes that are frequently encountered in business practice: refundable VAT (applicable to foreign contractors) and withholding tax (income tax for foreign contractors).
1.income tax (also known as Personal Income Tax, or PIT in other legislation system)
2.value added tax (VAT);
3.Property Tax
4.profit tax
5.excise tax
6.import duty
In this article, we will take a detailed look at the first five taxes and also examine 2 subtypes of taxes that are frequently encountered in business practice: refundable VAT (applicable to foreign contractors) and withholding tax (income tax for foreign contractors).
Value added tax
Who pays (The Taxpayer)
VAT in Georgia is paid by companies, individual entrepreneurs, individuals, non-governmental organizations (NGOs), and permanent establishments of foreign companies:
Tax Base
The income from VAT-taxable transactions received during the reporting month.
Tax Rate
18%.
Time of Taxation
VAT on the supply of goods/services is charged at the moment of supplying goods/providing services, unless otherwise specified by the Tax Code.
Deadline for Filing and Paying the Tax
By the 15th day of the month following the reporting month
Transactions Exempt from VAT or Not Subject to Taxation
Export of goods and services, as well as medical, educational, tourism-related services, and other services specified by the Tax Code.
VAT in Georgia is paid by companies, individual entrepreneurs, individuals, non-governmental organizations (NGOs), and permanent establishments of foreign companies:
- with a turnover of 100,000 GEL or more over 12 consecutive months;
- producers of excisable goods;
- A legal entity formed through reorganization, provided that one of its participants is already registered as a VAT payer.
- In cases when goods/services are received as a payment from a partner/participant registered as a VAT payer;
- Companies that have obtained VAT payer status by submitting an official application.
Tax Base
The income from VAT-taxable transactions received during the reporting month.
Tax Rate
18%.
Time of Taxation
VAT on the supply of goods/services is charged at the moment of supplying goods/providing services, unless otherwise specified by the Tax Code.
Deadline for Filing and Paying the Tax
By the 15th day of the month following the reporting month
Transactions Exempt from VAT or Not Subject to Taxation
Export of goods and services, as well as medical, educational, tourism-related services, and other services specified by the Tax Code.
Income Tax
Who pays (The Taxpayer)
- a resident natural person;
- a non-resident natural person earning income from a Georgian source.
- Individual entrepreneurs (including those with Small Business status).
Подробнее о налоговом резидентстве Грузии для иностранца читайте в этой статье
Tax Base
·The income (excluding expenses) – for individual entrepreneurs with Small Business status.
·In all other cases, income minus expenses, unless otherwise specified by the Tax Code of Georgia.
Tax Rate
20%.
Special Tax Rate
Deadline for Filing Tax Returns and Paying the Tax
·The income (excluding expenses) – for individual entrepreneurs with Small Business status.
·In all other cases, income minus expenses, unless otherwise specified by the Tax Code of Georgia.
Tax Rate
20%.
Special Tax Rate
- 5% of rental income in the case of leasing a property for residential purposes only if, the Landlord is registered in the Registry of Landlords (without expense deductions);
- 5% of rental income; of income received from the sale of a vehicle (within 6 months of purchase) or property (within 2 years of purchase);
- 5% of dividend income (unless otherwise specified by the Georgian Tax Code);
- 5% of income received as interest on loans;
- 5% of royalty income (for non-residents);
- 10% of income received from the organisation of games of chance in the systemic and electronic form.
- 1% of income for individual entrepreneurs (IE) with Small Business status.
Deadline for Filing Tax Returns and Paying the Tax
- Individual entrepreneurs with Small Business status – monthly no later than the 15th of a month following the reporting month;
- Individuals and individual entrepreneurs without Small Business status – by March 31 of a year following the reporting year;
- For property sales and dividend payments – by the 15th of a month following the sale of property or receipt of income or dividends.
Подробнее о подоходном налоге для иностранцев — в этой статье
Profit Tax (Corporate Tax)
Who pays (The Taxpayer)
Tax Base
For a resident enterprise:
а) the distributed profit;
b) the expenses borne or other payments not related to the business activity
c) free delivery of goods/services and/or transfer of funds
d) the representation expenses exceeding the limited amount determined by this Code
For non-resident enterprises that works in Georgia through a permanent establishment:
The profit of a permanent establishment;
Tax Rate
15%.
Special Tax Rate
Deadline for Filing Tax Returns and Paying the Tax
By the 15th day of the month following the distribution profit.
- resident enterprises;
- non-resident enterprises that works in Georgia through a permanent establishment and/or earns income from a Georgian source.
Tax Base
For a resident enterprise:
а) the distributed profit;
b) the expenses borne or other payments not related to the business activity
c) free delivery of goods/services and/or transfer of funds
d) the representation expenses exceeding the limited amount determined by this Code
For non-resident enterprises that works in Georgia through a permanent establishment:
The profit of a permanent establishment;
- expenses incurred by a permanent establishment or other payments not related to the economic activities of the permanent establishment;
- Free delivery of goods/services and/or the transfer of funds by a permanent establishment;
- Entertainment expenses exceeding the threshold amount established by this Code.
Tax Rate
15%.
Special Tax Rate
- 5% for companies with an International Company status;
- 0% for companies with a Virtual Zone Entity status;
- 0% for companies registered in a Free Industrial Zone;
- 0% for a Special Trading Company;
- 0% for companies with a High-Mountain Settlement Enterprise status;
Deadline for Filing Tax Returns and Paying the Tax
By the 15th day of the month following the distribution profit.
Property Tax
Who pays (The Taxpayer)
Tax Base
Tax Rate
Ø for families with income of up to GEL 100 000 – at least 0.05% but not more than 0.2% of the market value of the taxable property at the end of the tax year;
Ø for families with income of GEL 100 000 and more – at least 0.8% but not more than 1% of the market value of the taxable property at the end of the tax year.
The value of the property for tax calculation purposes
Exemptions from Property Tax
According to p. 6 of article 202 of the Tax Code of Georgia, for the purposes of property tax, all income earned by a household during the tax year is taken into account, including profit without taking tax exemptions into account, specifically:
a) taxable income earned from economic activity except as provided for by paragraph (6)(d);
b) any income, including income not related to economic activity;
c) gross salary;
d) for a person having the status of a small business:
d.a) 25% of income taxable under special treatment;
d.b) taxable income not subject to small business special treatment
В соответствии с п.7 ст.202 НК Грузии в доходы НЕ включаются (перечень закрытый):
А. a) value of property received from family members through succession, as a gift or as a result of divorce;
А. b) income received by a natural person (including by a first devisee, as an aggregate of his/her and his/her deviser’s) from sale of a residential apartment (house) having been in his/her possession for a period of over two years.
(Note: If, according to the legislation of the country where the property is located, the tax period is longer (e.g., 5 or 3 years in Russia), then income from the sale of the property after 2 years is not included in total income.)
А. c) income received from the original sale of property provided for by Article (82)(1)(m) of this Code;
(Note: This refers to property received as compensation within the framework of a privatization program by a person with refugee or humanitarian status, or by an internally displaced person, in exchange for temporary housing; compensation granted to such individuals by the state; and income from the initial sale of this property)
А. d) income of a fixed taxpayer and a person having the status of a micro-business received from such economic activity;
А. e) income exempted from income tax under Article 82 (1)(b1) and (b2) of this Code
(прим.: b1) benefit received from a non-entrepreneurial (non-commercial) legal person founded by the State within the scope of the charitable activities;
b2) benefit received from a charitable organisation for financing treatment and/or medical service expenses;
А. f) benefit received by an employee as a result of using an employer’s motor vehicle for his/her personal need.
N.B.:
1) The list of non-taxable income is exhaustive. This means that the following must be included in total income: pension, dividends, loan interest, as well as items not explicitly listed as exceptions - such as financial aid from the government and private individuals, gifts and inheritances, grants, and income from the sale of property and securities.
2) Property tax applies to assets received by leasing from a non-resident of Georgia;
3) Property tax applies to cars and other vehicles in Georgia under the "temporary import" status.
Deadline for Filing Tax Returns and Paying the Tax
— Enterprises/organisations must pay property tax on land no later than 15 November of a calendar year.
- Georgian enterprises
- NPO
- A non-resident enterprise
- A natural person (annual family income from sources in Georgia and abroad exceeded 40 000 GEL in the reporting year)
Tax Base
- For enterprises and organisation - taxable property (Including assets, registered on its balance sheet as fixed assets and/or investment property, uninstalled equipment, unfinished construction.)
- For a natural person - market value of the taxable property (Including properties, vehicles, helicopters, planes, unfinished construction.)
Tax Rate
- For an enterprises - 1% of the average annual book value of the taxable property
- For an individual, it is calculated individually based on income:
Ø for families with income of up to GEL 100 000 – at least 0.05% but not more than 0.2% of the market value of the taxable property at the end of the tax year;
Ø for families with income of GEL 100 000 and more – at least 0.8% but not more than 1% of the market value of the taxable property at the end of the tax year.
- companies with an International Company status - 0% on property (excluding land tax), provided the property is used or intended for use in business activities.
The value of the property for tax calculation purposes
Exemptions from Property Tax
- a natural person’s taxable property (except land) if the person’s family income received during the year preceding the tax year does not exceed GEL 40 000;
- property received by leasing from a Georgian resident;
- property on the territories defined by the Law of Georgia on Occupied Territories – temporarily, pending resolution of the conflict and improvement of the economic situation;
- property within a Free Industrial Zone;
- property, except land used for medical activities, which is in the possession of or leased to medical institutions;
- property related to hotel services of an entrepreneur in a tourist zone until 1 January 2026;
- the property owned by a high-mountain settlement enterprise and located in that high-mountain settlement – for 10 calendar years after the granting of the status (including the calendar year in which the status was granted);
- Other types of property specified in Article 206 of the Tax Code.
According to p. 6 of article 202 of the Tax Code of Georgia, for the purposes of property tax, all income earned by a household during the tax year is taken into account, including profit without taking tax exemptions into account, specifically:
a) taxable income earned from economic activity except as provided for by paragraph (6)(d);
b) any income, including income not related to economic activity;
c) gross salary;
d) for a person having the status of a small business:
d.a) 25% of income taxable under special treatment;
d.b) taxable income not subject to small business special treatment
В соответствии с п.7 ст.202 НК Грузии в доходы НЕ включаются (перечень закрытый):
А. a) value of property received from family members through succession, as a gift or as a result of divorce;
А. b) income received by a natural person (including by a first devisee, as an aggregate of his/her and his/her deviser’s) from sale of a residential apartment (house) having been in his/her possession for a period of over two years.
(Note: If, according to the legislation of the country where the property is located, the tax period is longer (e.g., 5 or 3 years in Russia), then income from the sale of the property after 2 years is not included in total income.)
А. c) income received from the original sale of property provided for by Article (82)(1)(m) of this Code;
(Note: This refers to property received as compensation within the framework of a privatization program by a person with refugee or humanitarian status, or by an internally displaced person, in exchange for temporary housing; compensation granted to such individuals by the state; and income from the initial sale of this property)
А. d) income of a fixed taxpayer and a person having the status of a micro-business received from such economic activity;
А. e) income exempted from income tax under Article 82 (1)(b1) and (b2) of this Code
(прим.: b1) benefit received from a non-entrepreneurial (non-commercial) legal person founded by the State within the scope of the charitable activities;
b2) benefit received from a charitable organisation for financing treatment and/or medical service expenses;
А. f) benefit received by an employee as a result of using an employer’s motor vehicle for his/her personal need.
N.B.:
1) The list of non-taxable income is exhaustive. This means that the following must be included in total income: pension, dividends, loan interest, as well as items not explicitly listed as exceptions - such as financial aid from the government and private individuals, gifts and inheritances, grants, and income from the sale of property and securities.
2) Property tax applies to assets received by leasing from a non-resident of Georgia;
3) Property tax applies to cars and other vehicles in Georgia under the "temporary import" status.
Deadline for Filing Tax Returns and Paying the Tax
- A natural person― The deadline for filing the tax returns no later than 1 November of a following the reporting year. Tax payment timeframe ― no later than 15 November of a following the reporting year.
- An enterprises and Individual entrepreneurs Для предприятий и ИП ― The deadline for filing the tax returns and paying the tax no later than 1 November of a following the reporting year.
— Enterprises/organisations must pay property tax on land no later than 15 November of a calendar year.
Подробнее о подходе Службы доходов к налогобложению собственников-нерезидентов читайте здесь
Ответ налогового органа по поводу уплаты налога собственником имущества - иностранцем-нерезидентом на русском языке читайте здесь, а в оригинале читайте здесь
Ответ налогового органа по поводу уплаты налога собственником имущества - иностранцем-нерезидентом на русском языке читайте здесь, а в оригинале читайте здесь
Excise tax
Who pays (The Taxpayer)
Manufacturers, Importers and exporters of excisable goods, suppliers of natural gas for vehicles, suppliers of goods that are specified under the National Commodity Nomenclature of Foreign Economic Activity Codes 2401, 2403 11 000 00, 2403 19 000 00 and 2403 91 000 00.
Tax Base
Tax Rate
Tax rate depends on the products and is determined by the Tax Code.
Deadline for Filing Tax Returns and Paying the Tax
Excise tax shall be subject to payment by the 15th day of the month following the accounting period for an excisable transaction.
Manufacturers, Importers and exporters of excisable goods, suppliers of natural gas for vehicles, suppliers of goods that are specified under the National Commodity Nomenclature of Foreign Economic Activity Codes 2401, 2403 11 000 00, 2403 19 000 00 and 2403 91 000 00.
Tax Base
- Imports of excisable goods;
- Exports of excisable goods.
Tax Rate
Tax rate depends on the products and is determined by the Tax Code.
Deadline for Filing Tax Returns and Paying the Tax
Excise tax shall be subject to payment by the 15th day of the month following the accounting period for an excisable transaction.
Reverse charges of VAT
Who pays (The Taxpayer)
A taxpayer is a taxable person not established or not ordinarily resident in Georgia or not having a fixed establishment in Georgia.
Tax agent
Any person (Including Companies, Individual entrepreneurs, NPO, partnerships), established in Georgia (except for a non-entrepreneur natural person and a FIZ enterprise) or which has a fixed establishment in Georgia through which the service was purchased;
Tax Base
Вознаграждение, подлежащее уплате исполнителю
Tax Rate
18%
Deadline for Filing Tax Returns
by the 15th day of the month following the accounting period (For non-registered VAT payers - it is a special form for refundable VAT; For registered VAT payers - it is a standard VAT tax return).
Refundable VAT payment
A taxpayer is a taxable person not established or not ordinarily resident in Georgia or not having a fixed establishment in Georgia.
Tax agent
Any person (Including Companies, Individual entrepreneurs, NPO, partnerships), established in Georgia (except for a non-entrepreneur natural person and a FIZ enterprise) or which has a fixed establishment in Georgia through which the service was purchased;
Tax Base
Вознаграждение, подлежащее уплате исполнителю
Tax Rate
18%
Deadline for Filing Tax Returns
by the 15th day of the month following the accounting period (For non-registered VAT payers - it is a special form for refundable VAT; For registered VAT payers - it is a standard VAT tax return).
Refundable VAT payment
- If an entity is not a registered VAT payer, the refundable VAT must be paid by the 15th day of the month following the accounting period.
- If an entity is a registered VAT payer (having the status of a qualified payer is not required in this case) and is entitled to a deduction,then the refundable VAT must be assessed for and claimed as a deduction in the VAT return. In this case, no actual payment of the specified tax amount takes place. (VAT deduction Articles 174, 175, and 176 of the Tax Code of Georgia.)
Withholding tax at source
Who pays (The Taxpayer)
A non-resident providing services to an individual entrepreneur (IE) or a resident enterprise, provided that the income is considered to be sourced from Georgia under Article 104 of the Tax Code, and the non-resident service provider does not have a permanent establishment in Georgia.
Tax agent
Enterprises and individual entrepreneur (IE) - acquiring services from a non-resident.
Tax Base
The remuneration amount paid to a non-resident for services provided.
Tax Rate
Cases of Tax Exemption
Deadline for Filing Tax Returns and Paying the Tax Tax Payment
A non-resident providing services to an individual entrepreneur (IE) or a resident enterprise, provided that the income is considered to be sourced from Georgia under Article 104 of the Tax Code, and the non-resident service provider does not have a permanent establishment in Georgia.
Tax agent
Enterprises and individual entrepreneur (IE) - acquiring services from a non-resident.
Tax Base
The remuneration amount paid to a non-resident for services provided.
Tax Rate
- 10% - general rule
- 5% - for royalty payments
- 15% - If remuneration is paid to a contractor residing in an offshore or equivalent zone.
Cases of Tax Exemption
- The existence of a Double Taxation Avoidance Agreement between Georgia and the contractor’s country of tax residency
- A document verifying the contractor’s tax residency status.
Deadline for Filing Tax Returns and Paying the Tax Tax Payment
- Tax payment deadline– on the day the remuneration is paid to the contractor
- Tax returns submission deadline – by the 15th of the month following the remuneration payment (reported in the corporate income tax return)
Penalties for Late Tax Payment
For late submission of the tax returns: A warning or a fine on the person in the amount of GEL 100.
For late tax payment: a penalty of 0.05% per day of the unpaid tax amount.
For failure to pay tax on time:
If the tax is voluntarily paid after the deadline, the penalty amount may be reduced by 50%, provided that payment is made within one month from the date of tax return submission.
For late tax payment: a penalty of 0.05% per day of the unpaid tax amount.
For failure to pay tax on time:
- If the delay period does not exceed 2 months, –fine in the amount of 5% of the unpaid tax amount.
- If the delay period exceed 2 months, –fine in the amount of 10% of the unpaid tax amount.
If the tax is voluntarily paid after the deadline, the penalty amount may be reduced by 50%, provided that payment is made within one month from the date of tax return submission.
The tax reporting and payment system in Georgia is quite simple and comfortable for entrepreneurs. The country has a number of preferential regimes (status of an international company, resident of a virtual zone, small business, fixed tax) that allow for the optimization of tax costs. JUST Advisors provides tax planning services, offers consultations on the Tax Code of Georgia, and assists in choosing the appropriate business structure and taxation system.
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