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Georgia tax guide

Georgia tax guide

The Tax Code of Georgia establishes 6 types of taxes:

1) income tax (also known as personal income tax in other jurisdictions)

2) Value Added Tax (also known as VAT or VAT for short)

3) property tax

4) income tax (or corporate tax)

5) import tax

6) excise tax

Income tax

Taxpayer

· resident physical person;

· Non-resident physical person receiving income from a source in Georgia;

· PE (including PE with the status of Small Business).

Tax base

· income (excluding expenses) - for PE with Small Business status;

· in all other cases - income minus expenses.

Tax rate

· 20% (general)

· 5% on rent for residential purposes; on income from the sale of a vehicle (within 6 months from the date of purchase) or housing (within 2 years from the date of purchase); on dividends

· 1% of income for PE with Small Business status;

Deadline for filing a tax return and paying tax

· PE on income with Small Business status - monthly by the 15th day of the month following the reporting month;

· physical persons and PEs without Small Business status - by March 31 of the year following the reporting year.

· In case of a natural person which gains a surplus through supplying property/assets within non-commercial business activities - not later than the 15th day of a month following the accounting month

VAT

Taxpayer: Companies, individual entrepreneurs, non-profit organizations, as well as permanent establishments of foreign companies:

  • With a turnover of GEL 100,000 for 12 consecutive months.
  • Producers of excisable goods.
  • Persons that have received the status of VAT payer on the basis of an application.
  • In other cases established by the Tax Code of Georgia.

Tax base: Income from operations subject to VAT.

Tax rate: 18%

Time of taxation: VAT taxation of the supply of goods/services shall be performed at the moment of supply of goods/services, unless otherwise provided by the Tax Code.

Deadline for filing a tax return and paying tax: By the 15th day of the month following the reporting month.

VAT is exempt or the operation is not taxed: Export of goods and services, medical, educational, touristic services, and other services determined by the Tax Code.

VAT Reverse Charge

Taxpayer: Taxable person who is not established or ordinarily resident in Georgia or who does not have a fixed establishment in Georgia.

Tax agent: Any person (including companies, individual entrepreneurs, non-profit organizations, partnerships) established in Georgia (except for a non-entrepreneur natural person and a FIZ enterprise) or who has a fixed establishment in Georgia through which the service was purchased.

Tax base: Remuneration payable to the performer.

Tax rate: 18%

Deadline for filing a tax return: Before the 15th day of the month following the reporting period (for unregistered VAT payers - this is a special reverse charge form, for registered VAT payers - a regular VAT tax return).

Payment of reverse charge VAT:

  • In the event that the person is NOT a registered VAT payer, before the 15th day of the month following the reporting period.
  • If a person is a registered VAT payer (qualified payer status is NOT necessary in this case) and it is established that the taxpayer has the right to VAT deduction, in this case, reverse charge VAT shall be charged and also presented for deduction in the VAT return. In this case, the actual payment of the specified amount of tax does not occur (VAT offset, Articles 174, 175, 176 of the Tax Code of Georgia).

Income tax (corporate tax)

Taxpayer: resident or non-resident enterprise, which operates in Georgia through a permanent establishment and/or receives income from a source in Georgia.

Object of Taxation

· distributed profit/profit of the permanent establishment

· the expenses borne or other payments not related to the economic activity;

free delivery of goods/services and/or transfer of funds;

· the representation expenses paid in excess of the limited amount determined by Tax Code.

Tax rate: 15%

Tax Exemptions:

· 5% for companies with the status of an International Company

· 0% for companies with the status of a Virtual Zone Entity.

· 0% for free industrial zone companies

· 0% for special trade companies

· 0% for companies with the status of an enterprise of a highland settlement

Deadline for filing a tax return and paying tax: By the 15th day of the month following the distribution of profit

Withholding tax

Taxpayer: a non-resident (that does not have a permanent establishment in Georgia) providing services to a individual entrepreneur or a resident enterprise, if that the income is deemed received from a source in Georgia in accordance with article 104 of Tax Code,

Tax agent: a resident enterprise or an individual entrepreneur purchasing (receiving) services from a non-resident.

Object of taxation:

· The amount of remuneration paid to the non-resident for the services rendered

Tax rate: as usual 10%, in case of royalty 5% (if the company is registered in the so-called offshore jurisdiction then 15%).

Tax exemption:

· availability of double taxation agreement between Georgia and the country of tax residence of the performer

· availability of a document confirming the tax residency status the performer

Deadline for filing a tax return and paying tax:

· tax payment deadline - on the day of payment of remuneration to the performer

· deadline for filing a tax return - by the 15th day of the month following the payment of remuneration

Property tax

Taxpayer: Georgian enterprises, NGOs, non-resident enterprises and NGOs, individuals (annual family income from source in Georgia and abroad exceeded GEL 40,000 in the reporting year)

Object of taxation:

· For enterprises and organizations - taxable property (including assets considered on its balance sheet as fixed assets and/or investment property, unestablished equipment, unfinished construction, etc.)

· For individuals – the market value of taxable property (including real estate, vehicles, helicopters, airplanes, unfinished construction, etc.)

Tax rate:

· for enterprises - 1% of the average annual net book value of taxable property

· for individuals is calculated individually with regard to income:

- 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;

- 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.

· An international company shall be exempt from property (except for land) tax if that property is intended or used for the performance of activities allowed by the ordinance of the Government of Georgia.

Deadline for filing a tax return and paying tax

· Enterprises - by April 1 of the year following the reporting year,

· Individuals - deadline for filing a declaration by November 1 of the year following the reporting year, deadline for tax payment - by November 15 of the year following the reporting year.

The value of property for the purposes of tax calculation

· Owner individual determines value of property independently, based on the market value of the property at the end of the tax period.

· The value of taxable property for a company shall be the average annual net book value (calculated according to the average value of assets at the beginning and at the end of a calendar year). The Revenue Service reserves the right during a tax audit to determine the value of taxable property to the taxpayer at market value.

· The value of a building located on a land plot is determined separately from the value of the land plot.

Property tax is not levied on (exception)

· taxable property (except land) of natural persons, if the income received by the families of these persons during the year preceding the current calendar year does not exceed GEL 40,000;’

· property leased from a resident of Georgia;

· property located on the territories established by the Law of Georgia "On Occupied Territories" - temporarily, until the conflict is settled and the economic situation is regularized;

· property located in a free industrial zone;

· property used for medical activity, except for land owned by medical institutions or leased to such institutions;

· property related to the provision of hotel services by an entrepreneurial entity of a tourist zone - until January 1, 2026;

· property owned by an entrepreneurial entity of a high-mountain settlement on the territory of the said high-mountain settlement - within 10 calendar years after granting the respective status

· Other property stipulated by stage 206 of the Tax Code