This article outlines all of the taxes in Georgia (Country) including the income tax & corporate tax rates. If you are more interested in a practical guide on how and why to move your tax residency / business to Georgia, read our guide here.
Taxation in Georgia (Tax Code, Article 6). Summary of tax categories:
- Income tax
- Profit tax / Corporate Tax Rate
- Value added tax (VAT)
- Excise duty
- Import tax
- Property tax
In addition to these there are also taxes which must be paid by withholding agents “Article 20.2. A withholding agent shall be a person who must fulfil a taxpayer’s tax obligation in the cases and in the manner provided for by this [tax] Code”. Essentially, withholding is the responsibility of the person paying (withholding agent), rather than the person receiving (taxpayer) income.
Resident: An individual or legal entity that is a tax resident of Georgia.
Legal Resident: An individual (natural person) who has a Georgian ID or Passport and has legal residence to remain in Georgia.
Tax Year: The reporting year for Georgian taxation, which runs from January 1st to December 31st. The deadline for annual filing is March 31st of the following year.
Georgian Tax Rates For These Categories
Below you’ll find a summary of taxes in Georgia (Country) from each of the tax categories.
(PIT) Personal Income Tax in Georgia (Country)
These are taxes that are levied directly on the individual taxpayer.
PIT Standard rate: 20%
20% on taxable income which has not been taxed elsewhere (ie. if your salary was not already taxed at source in Georgia, for example). It must be declared and paid by the 31st of March in the year following the reporting year.
PIT for Small Businesses Status
Special tax rates for Small Businesses are applied following approval of the Small Business Status. They cannot be applied retroactively to past income.
- 1% (On turnover up to 500,000 GEL per year)
- Or 3% (applied to the portion of gross revenue that exceeds GEL 500,000).
NOTE: If gross revenue (turnover) exceeds 500,000 GEL in 2 consecutive years, the small business status will be revoked.
Small business income must be declared and paid by the 15th of each month.
PIT for Micro Businesses Status: exempt (0%)
Micro businesses must declare and pay tax by the 31st of March in the year following the reporting year.
PIT for individuals renting out residential living space: 5%
Must be filed and paid by March 31st of the year following the accounting year.
PIT on gains derived by individuals from sale of immovable property and vehicles: 5% (some exemptions applicable). Paid by March 31st of the year following the sale.
Profit Tax / Corporate Tax
Georgia (Country) Corporate Tax Rate, Standard rate: 15%
Corporate Income Tax (CIT) is applied to profit of LLCs and other Georgian legal entities. Typically, this tax is only levied at time of distribution. Reinvested profits within the company can remain indefinitely without being taxed.
CIT for Virtual Zone Companies: Exempt (0%)
CIT for International Company Status: 5% at time of distribution.
Taxes in Georgia (Country): Withholding Rates
Withholding rates are paid by the withholding agent on relevant taxable expenditure. Withholding rates can affect anyone with business expenses, contractors or employees. This includes sole proprietors (individual entrepreneurs) as well as LLCs and other types of legal entities.
Salary paid to resident individuals: 20%
In addition to salary, an employer is required to pay pension contributions for employees who are legal permanent residents of Georgia. Pension is paid at 2% Gross + 2% Net on total salary.
For International Company Status, salary is taxed at just 5% + pension, if applicable.
Salary paid to non-resident individuals: Up To 20%
If your employees are from countries which have a Double Taxation Avoidance (DTA) Treaty with Georgia, and if the treaty so specifies, then withholding tax can be as low as 0%, levied in Georgia.
In which case, those employees would be paid a gross salary and pay their own income taxes in their home country, as determined by their local laws.
If you have employees who are not resident in Georgia, and there is no DTA, then tax withholding will apply (20%) in Georgia. The employee may also be taxed in their home country on the income they receive. In some cases, they can apply for tax relief/credits through their local authorities.
If a Georgian company pays dividends, they are taxed at source at the time of distribution to individuals or foreign entities.
- Dividends paid to individuals and non-resident persons: 5%
- Dividends paid by a Free Industrial Zone (FIZ) entity: Exempt (0%)
- Dividends paid by an entity with International Company Status (ICS): Exempt (0%)
Georgia does not levy additional personal income tax on dividends you receive as a Georgian resident individual.
- Interest paid to individuals and non-resident persons (not having a permanent establishment (PE) in Georgia: 5%
- Interest paid to residents of offshore jurisdictions: 15%
- Interest paid by a FIZ entity: Exempt (0%)
- Royalties paid to resident individuals: 20%
- Royalties paid to non-resident persons: 5%
- Royalties paid to residents of offshore jurisdictions: 15%
The below apply when purchasing goods or services from non residents. This includes anything you buy from outside Georgia, from hiring a contractor on Upwork to paying for a monthly Zoom subscription. If your business purchases services that are not supplied by a Georgian resident, you may owe tax withholding.
This withholding is applied only on other income that has not already had tax withheld as stipulated above.
Other Georgian source income received by non-residents: 0 to 10%
The tax withholding rate depends on the country from which the product/service is supplied. Countries that have a DTA will typically lead to 0% tax withholding being levied. Countries which do not have a treaty, are taxed at 10% withholding, unless they are an offshore jurisdiction:
Other Georgian source income received by residents of offshore jurisdictions: 15%
If you purchase products/services from countries that are seen as having preferential taxation, then withholding tax is charged at 15%. The full list of these countries is here.
Standard rate: 18%
- Applied to all domestic transactions where the seller is VAT registered.
- Applied to certain types of goods at time of importation.
- Not applied to B2B sales of products/services to non residents.
- B2C sales have varying rules on if VAT will be applied.
If your business is VAT registered, you can claim back any VAT that was withheld at source, so long as your business type has the right to deduction.
Reverse-VAT (Reverse Charge VAT) applies to the purchases of goods and services from non-resident VATable persons/entities, where Georgian VAT has not been applied at source.
You are required to declare and pay reverse-VAT on any such purchases. This would include anything from non-resident contractors you hire to software licenses etc.
Declaration is required whether your Georgian business is VAT registered, or not. However, if you are VAT registered, then you can declare and simultaneously claim back the 18%. Making the VAT on that transaction effectively zero.
For this reason, if your Georgian business exclusively sells to foreign clients, and you have business expenses both domestic and international, it almost always makes sense to become a registered VAT payer. Read more about reverse-VAT here.
Deadlines: VAT & Reverse VAT declarations must be submitted and paid by the 15th of each month.
Property Tax & Rental Income
Property owned by companies: Up to 1% (In practice, it is almost always 1%)
For leasing companies (engaged in financial, not operational lease): 0.6%
For individuals: 0% to 1% (depending on household income, as well as the municipality in which the property in question is located in).
On land: varies by type of land (agricultural or non-agricultural) and municipality.
Rental of commercial property: 20%
Rental of residential property: 5% (Terms apply)
Tax on certain types of vehicles: 1%
A vehicle is defined thus: “[Y]achts (cutters), helicopters, airplanes, and motor cars specified under Code 8703 of the National Commodity Nomenclature of Foreign Economic Activities that are owned by him/her” (Georgian Tax Code 201.1.c.a )
Individuals are required to file and pay property tax between November 1st and November 15th of each year.
Individuals renting out residential property shall file a personal income tax return by March 31st of the year following the accounting year.
Legal entities must file property taxes by March 31st of the year following the reporting period.
0%, 5% or 12%, depending on the type of goods. (Article 197, Tax code)
You can check the specific tax rate if you know the special code of the product OR translate the name of the product into Georgian and input the search for the name rather than code. Or, you can sift through the very long list of all the items in Article 197 of the tax code.
Some products need special permission to be imported; the permission costs 30 GEL.
Import taxes are usually paid within 5 days (customs might give a different deadline) of when the product arrives at the customs office.
VAT (18%) may also be applied to imported goods at time of importation. The payment deadline is determined at customs. If VAT applies, it will do so no matter who the recipient is (whether they are a VAT payer or not)
Some countries are exempt from import tax – such as EU countries and a few others. VAT may still apply.
Imports of less than 300 GEL value are entirely exempt from import tax and VAT.
Note: Article 173 of the new VAT provisions lists all the goods that are exempt from VAT on import. In addition to that, goods that are in connection to large scale projects (pipelines, etc.) that are regulated by international treaties are also exempt.
Excise varies depending on the goods.
See Tax Code Section VII, Articles 182 to 194 for more information.
Excise duty is due to be paid by the 15th of each month on goods assessed in the preceding calendar month.
Tax Residency & Business Ownership In Georgia
Read our full guide on why to move your business and tax residency to Georgia.
From qualifying for the 1% tax rate, to lifestyle in Georgia and the best way to avoid tax leakage during the process.
If you are thinking of moving to Georgia, or incorporating here, our expert tax advisers can help. We can also help with remote business registrations, as well as local ones.
Whether you are already here, or considering the move, you can book a free tax consultation online via Zoom, or in person, to discuss your unique tax situation, if Georgia will be right for you, and the best way to minimize your taxes.