Income Tax Declaration
13 March 2025
Giorgi Zhuzhunashvili, Attorney, Tax Advisor
- Who shall submit the income tax declaration?
Residents and non-residents (individuals) – in any case, if they have received taxable income from a Georgian source.
2.Which incomes should be declared?
- Income received from Georgian sources.
- All income, including income received outside the borders of Georgia. These should be declared, though they are not subject to taxation.
- When a non-resident individual submits a tax declaration requesting a refund of paid amounts, only income received from Georgian sources, as specified under subpoints "g", "d", "d1", and "e" of the first point of Article 134 of the Georgian Tax Code, should be declared.
3.What does "income from Georgian sources" mean?
Article 104 of the Tax Code indicates which types of income are considered as received from Georgian sources.
4. What is the income tax rate?
The rates differ and depend on the type of income:
- The basic rate is 20% – this rate applies to salaries, income from work performed, services rendered, as well as, for example, income from renting an office.
- 5% – this rate applies to income received from renting property for residential purposes (apartments, houses, hotel rooms). It does not matter whether you rent it yourself, through an agent, or through a management company or a platform like Booking. To benefit from this tax benefit, you must register in the lessors' registry. 20% – income received as royalties.
- 20% – income received as gifts or inheritance.
- 0% – income received as interest paid by financial institutions of Georgia.
5.Does the place of receipt or the form of payment matter? For example, what happens if the funds from a foreign client are transferred in USD to a foreign bank account or if the payment is received as a crypto asset?
- To determine whether you are obligated to pay taxes, it does not matter where you received the income – in Georgia or abroad. For example, if you received income for working in Georgia on behalf of a non-resident individual, it will be taxed in almost all cases.
- Note that any income for tax accounting purposes must be converted into GEL at the exchange rate of the National Bank of Georgia on the date of receipt, and this should be declared accordingly.
6.Is there any responsibility for not paying taxes?
- Yes, for late payment of taxes, you will be charged a penalty of 0.05% of the unpaid tax amount daily.
- If the declaration is submitted late and the delay is over two months, a fine of 5% of the declared tax amount will be imposed. If the delay exceeds two months, the fine will be 10%.
- If the tax authority finds that you had taxable income and did not pay the tax, a penalty of 50% of the unpaid tax amount will be imposed.
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MARIA GUSEINOVA
Leading Manager of Commercial Department
Leading Manager of Commercial Department