Georgia flag Georgia: Business Environment

Tax rates in Georgia

Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Damatebuli Ghirebulebis Gadasakhadi (Local Name)
Tax Rate
18%
Reduced Tax Rate
Exempt items include: passenger cars; publications and mass media; baby products; land plots; supply of goods and services between Free Industrial Zone Companies; conduct of financial operations or supply of financial services; medical services; educational services; assets under finance leases if the assets are exempt without the entitlement to credit; betting and gaming services; import of gold for supply to the National Bank of Georgia; supply or import of goods and services needed for the oil and gas industry under the Law of Georgia “on Oil and Gas”; import of natural gas for electricity production; import or temporary import of goods intended for the personal use of the citizens of foreign; countries employed at oil and gas exploration and extraction works; import of natural gas for electricity production; import of goods by an issuer or a recipient of the grant as defined by the grant agreement; etc.

Zero-rated items include: supply of fuel or groceries to the aircraft; supply, remake, repair, servicing or lease of aircraft and equipment installed or used on an aircraft; supply of goods outside Georgia (export, re-export); supply of goods or services intended for the official use of foreign diplomatic missions and equivalent representative offices as well as for the personal use of the members of such diplomatic missions and representative offices (including family members residing with them); transportation of goods under export, re-export, external processing and transit arrangements (foreign goods moving through the customs territory of Georgia) and related services; transportation of goods not yet declared into import, warehouse, temporary import, internal processing or free-zone operations between points located in Georgia and related services (except for storage services); transportation of goods declared into import, warehouse, temporary import, internal processing or free-zone operations before entering the territory of Gergia from the customs border of Georgia to the destination point and related services (except for storage services); transportation of goods declared into import, warehouse, temporary import, internal processing or free-zone operations before entering the territory of Georgia from the customs border of Georgia to the destination point and related services (except for storage services); transportation of passengers and cargo and related services, if the departure or arrival point is located outside Georgia and if a unified transportation document is issued for such transportation; import and supply of products to be provided on board for international flights or international sea passages; transportation, loading, unloading and storage services provided for the purpose of sending (returning) empty transport facilities (including containers and wagons) outside Georgia; supply of natural gas to thermoelectric power stations; supply of Georgian goods to a duty-free outlet for sale, and sale of goods and provision f catering services in a duty-free zone; supply of gold to the National Bank of Georgia; organized foreign tours into Georgia by tour operators and the supply of tourist packages to foreign tourists; rendering of services to ships on carrying goods into the customs territory of Georgia; supply of goods or services or import of goods that qualify for VAT exemption in accordance with the framework of international agreements ratified by the parliament of Georgia; supply of unprocessed agricultural products produced in Georgia (except for eggs and chicken); supply/import of books and e-books, also, rendering of sales and printing services for the goods.
Other Consumption Taxes
Excise duties are applied on alcoholic drinks, condensed natural gas, oil distillates, goods produced from crude oil, tobacco products and automobiles. Telecommunication services and international phone calls are subject to excise taxes (GEL 0.15 per minute on the mobile network; GEL 0.08 per minute on the fixed network).
 
Find out more about Taxes and Accounting in Georgia on GlobalTrade.net, the Directory for International Trade Service Providers.
 

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Corporate Taxes

Company Tax
15%
retained profits are no longer taxable until they are distributed
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income, whereas non-residents are taxed only on their Georgia-source income.
Non-resident companies are subject to tax at the same rate as resident companies.
Foreign companies without a permanent establishment earning income from Georgian sources are subject to withholding taxes (5% for dividends, interest and royalties; 10% for international transportation/communication and for services rendered in Georgia; 4% for oil and gas subcontractor income; 0% for insurance and re-insurance).
Capital Gains Taxation
Capital gains are taxable as normal business income at the general corporate income tax rate.
Main Allowable Deductions and Tax Credits
The new corporate tax law incorporates the IFRS accounting principle, and does not provide for any deduction as it only taxes distributed profits (retained profits are no longer taxable until they are distributed).
However, the deductions listed below still apply to the taxpayers who continue operating under the old CIT system:
- interest (capped at 24%);
- reserves of insurance funds;
- scientific research;
- depreciation of fixed assets (5-20%);
- repairs;
- bad debts (conditions apply);
- insurance costs;
- prospection and extraction of resources;
- depreciation of intangible assets (in proportion with the period of beneficial use, assets valued less GEL 1,000 are fully deductible);
- bad debts (under conditions);
- charitable contributions (up to 10% of taxable profit).

Start-up expenses incurred before the registration of the company as a taxpayer are not deductible.
Net operating losses can be carried forward for up to five years (taxpayers can request an extension up to 10 years). The carryback of losses is not permitted.
Other Corporate Taxes
Property tax is levied at maximum of 1% on the annual average residual value of fixed assets (except for land). The average residual value is multiplied by a coefficient of between 1.5 and 3 for properties acquired before 2005. Land used for agricultural purposes is taxed per hectare at rates varying from GEL 5 to GEL 100. An additional coefficient of up to 150% applies depending on the location. Non-agricultural land is taxed at GEL 0.24 per square metre, with a territorial coefficient of up to 150%.
Georgia does not levy transfer taxes or stamp duties. There are no social security contributions payable by the employer. However, payments to a defined contribution pension scheme are mandatory, with the employer contributing 2% of the employee’s gross salary. A self-employed person makes a 4% contribution.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Georgia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 5.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 216.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 9.9 36.5 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Income Tax 20% flat rate
Individuals with annual turnover below GEL 30,000, without employees, and registered as a micro business exempt from tax on their business income
Individual entrepreneurs registered as small business 1% on turnover if it is below GEL 500,000
3% on turnover if it is above GEL 500,000
Income from renting out residential space to an individual solely for residential purposes 5%
Allowable Deductions and Tax Credits
Expenses related to business activities are deductible for individual entrepreneurs. There are no personal deductions or allowances for employees.
Special Expatriate Tax Regime
Resident and non-resident individuals are taxable only on Georgia-source income at the same rates.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the conventions signed
Withholding Taxes
Dividends: 0 (paid to resident companies)/5%; Interest: 0 (paid to resident companies)/5%/15% (if paid to a non-resident registered in a low-tax jurisdiction); Royalties: 0 (paid to resident companies)/20% (resident individual)/5%/15% (if paid to a non-resident registered in a low-tax jurisdiction)

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Find out more about Taxes and Accounting in Georgia on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: April 2022