The Complete Guide to

Georgia's Tax Rates

 

Written by Emil Goncharov

 

The tax laws in the Georgian economy are based on 6 fixed tax rates for both individuals and corporations. The country is particularly striving to attract foreign investors to make investments in various fields such as construction, hotel, manufacturing and more using low taxation and simple bureaucracy which helped Georgia to be selected as one of the 10 best countries in the world in terms of ease of doing business.

 

The taxation on individuals income in Georgia is determined by the physical location in which the income was generated. For Example, an individual who has earned income in Georgia will be taxed in Georgia. Unlike individuals, a Georgian company is being taxed for its revenue generated anywhere in the world. A company will be regarded as a Georgian company according to the control and management tests.

 

Starting 2017, Georgia began using the Estonian model (as the second country in the world to use the model after being introduced by Estonia in 2000) to incentive corporations and foreign investors. Based on this model, Georgian companies won't be taxed But only in the distribution of funds (dividend). Lets highlight it one more time - As long as a company invests its income back in business or other investments it is not taxed until it distributes its money. This is one of the biggest incentives for Georgia companies!

 

Another incentive for small/new Georgian companies is that the VAT payment (18%) is made only after the company has generated income of 100K Lari in the last 12 months.

 

In addition, Georgia has a tax treaty with over 45 countries to avoid double taxation and regulate tax laws between the 2 countries.

 

 

The applicable tax rates in Georgia

Interest Tax

5%

 

Assuming that a company receives interest on a loan or any interest from a Georgian entity

VAT

18%

Companies pay VAT only as soon as their turnover exceeds 100,000 Lari in the last 12 months (for the first 100K, no VAT is paid)

Purchase tax

 

0%

 

There is no tax on property purchase in Georgia

Real Estate Agent

Up to 5%

Although not taxable but relevant to the real estate world

 

- In Georgia, only the seller pays a real estate agent up to a maximum of 5%

Pension

2% - Employer

2% - Employee

2% - Government

 

* Only if the employee is under 40 or over 40 and registered with the pension office

Corporate Tax

15%

Only paid when distributing the funds as a dividend in addition to the dividend tax

Capital gains tax (sale of property)

 

5% / 20%

5% in the sale of a property associated with a residence

20% selling property associated with business activity

Land Tax

 

0.24 Lari per m2

Estimate the value of the land by a qualified appraiser and pay 0.24 Lari for each m2 of land

Income Tax

20%

 

20% of gross salary

Dividend Tax

 

5%

 

Dividend distributed by a Georgian company

Rental income

 

5% / 20%

 

5% - if the property is used for residential purposes

20% - if the property is used for business

Property tax

 

0% -1%

For individuals - 0% -1% depending on the income

 

For businesses - 1% of average book value between the beginning and the end of year (after depreciation)

 

* The value of the land should be reduced as it is taxed separately

The above article does not constitute a legal opinion, recommendation or professional advice. Also, the article may not be up-to-date or accurate and you should not be relied upon without consulting an office specializing in international taxation.

For more information, use this guide

 

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