Georgia is sixth in rank on the World Bank`s list of Doing Business that takes into account many factors such as –
- Time and cost involved in starting a business,
- Getting a construction permit approved in time to get on with the process,
- Getting the electricity permit approved along with timely and continuous electricity supply,
- Procedure for registering property,
- The smooth flow of credit,
- Protecting the rights of shareholders` irrespective of the immensity of their shares,
- Regulations related to import and export,
- Quality of administration of commercial disputes,
- Quality of legislation to sort out commercial insolvency, and
- Employment opportunities.
This makes Georgia an ideal country for people all around the world looking for company registration in a favourable location that would help in the smooth incorporation of their business.
For all the excited enterprising minds out there those are ready to jump the gun first, let us dive into the tax legislation of Georgia.
Georgia is continuously trying to improve its investment and business ecosystem. The government of Georgia along with the World Bank is trying to make the country even more accessible to foreign markets. The Georgian government is also trying to expand economic participation in the country by aligning the tax legislation and the fiscal policies of Georgia with the legislation of the European Union. The tax structure has been simplified and unified with the customs legislation under the Tax Code of Georgia (TCG). These steps are taken to develop the economy of Georgia. All the development initiatives are made public.
There are a total of six types of taxes in Georgia on two levels-
- State level tax- Personal Income Tax (PIT), Corporate Income/Profit Tax (CIT), Value-Added Tax (VAT), Excise Tax and Customs Tax.
- Local level tax- Property Tax.
Corporate Income Tax
The National Agency of Public Register takes care of tax and legal registration of companies.A Georgian company (incorporated in Georgia) and a foreign company (not incorporated in Georgia but performs certain business activities in Georgia through a permanent establishment) are both taxed under CIT which is levied at a rate of 15%. Other important points to be kept in mind before filing corporate tax in Georgia are-
- Georgian companies are taxed on their worldwide income whereas foreign companies are taxed only for the income that has been generated in Georgia.
- International agreements on taxation take precedence over the Tax Code of Georgia.
- Georgia provides double taxation relief to foreign companies in accordance with its treaties with 52 countries.
- A Georgian company with all its branches consolidates its taxable income for CIT but for a foreign company tax on Georgian source income has to be filed separately for all its branches.
- The tax base is decided according to the International Financial Reporting Standards. It includes income from trade and financial activities, gains from realization of assets, dividend income, etc.
- Losses are allowed to be carried forward against future profits for 5 to 10 years.
- There are many exemptions on the tax base that corporations enjoy- income of charitable organizations, donations and grants received by companies, gains generated from sale of securities/bonds issued by the Government of Georgia or international financial corporations, etc.
- Expenses incurred to generate taxable income are allowed to be deducted from the tax base. This includes- employee expenses from business meetings or trips, cost of goods sold, consumable commodities such as fuel, bad debts, royalties, interest payable, expenses incurred on scientific research, etc.
- Enterprises can either decide to deduct depreciation charges on fixed assets all at once or over a period of time and should stick to one method for the next five years for all fixed assets for the purpose of corporate income tax.
- According to the tax legislation of Georgia, corporate income tax paid abroad is credited against the Georgian tax if proof of such is provided.
There is so much more to know about the corporate income tax of Georgia which can be quite a daunting experience for any enterprise. Therefore, outsourcing tax services in Georgia is an excellent option as it gives the following benefits-
- Save valuable company resources that can be put to other uses.
- Specialized tax services provider make the process of filing taxes hassle-free.
- They help organizations take better financial decisions by preparing reports that are easy to comb through for the management.
- Outsourcing helps organizations focus better on their core activities.
- It helps corporations in cost-saving.
Experts at Business Setup Worldwide have tax compliance experience in Georgia which will help your business grow and provide you the much-needed flexibility to perform the core business activities without the fuss of being in compliance with the tax legislation. If you are looking for tax services in Georgia, you can contact us whenever you like. We would be happy to provide you our services.