Located on a crossroad between European and Asian markets, Georgia has come a long way in terms of business and economy. Due to various business advantages such as low-cost workforce, a stable political environment, an attractive tax regime, and a well-developed infrastructure, many foreign investors choose to set up their business in Georgia. Not just this, Georgia has also signed bilateral investment treaties with 32 countries to boost the economy of the nation.
Coming to the crux of the article, taxation in Georgia is said to be one of the most advantageous in the Caucasus region. Georgia is a country with low tax rates and a transparent taxation framework. The tax and customs legislation is unified under one tax code and the collection of taxes and supervision of the tax environment is done by the Georgia Revenue Service. All tax administration procedures and customs clearances are online/web-based. A few applicable taxes for companies and individuals and special favorable tax regimes for certain foreign investments are taxed at a lower rate.
Georgia also has Double Taxation Avoidance Treaties with 52 countries.
Taxes in Georgia are collected both on state and local level. As of now, there are 6 flat tax rates in Georgia. They are:
A company is treated as a Georgian company if it is either incorporated or has its place of management in Georgia. Georgian companies are liable to Georgian corporate income tax (CIT) on their worldwide income, subject to double taxation or other international treaty reliefs. In general, any effective international agreement has precedence over domestic Georgian legislation, including the TCG. Also, the tax period for filing corporate tax is the calendar year. The Georgia corporate tax rate is at 15%. To file the taxes, the companies must, after registering their companies in Georgia, are required to obtain tax registration together with legal registration at the Entrepreneurial and Non-Entrepreneurial Registry of Legal Persons (the Agency), which is a public law legal entity – the National Agency of Public Register under the Ministry of Justice of Georgia.
Personal income tax (PIT) is a tax levied on the income of individuals. Individuals who are tax residents in Georgia pay PIT on their worldwide income, whereas tax non-residents pay PIT only on their Georgian source income, subject to double taxation treaty relief. Individuals starting economic activities are required to register with the GTA prior to their start-up and obtain a Tax ID. Georgian non-entrepreneur individuals may use a Personal ID when declaring and paying taxes without prior registration. The Georgia income tax rate is levied at 20%.
A VAT is an indirect tax. Thus, end-users of goods and services generally bear the costs of it. To put it simply, an end-user is a person who discontinues the chain of VAT taxable transactions. The VAT in Georgia is levied at 18% for all taxable transactions and imports unless a specific provision allows an exemption. The same rate applies to Reverse Charge VAT (RCVAT).
The rate applicable on custom goods is fixed at 0%, 5%, or 12% according to the HS codes. Most goods fall into the 0% rate category. Most food products and construction materials fall under the 5% or 12% tax rates. The import tax in Georgia is based on either the customs value or per physical volume of goods.
The resident companies of Georgia and the organizations are subject to property tax on fixed assets, uninstalled equipment, and construction in progress listed on their balance sheet, as well as leased out property.
The non-resident companies are also subject to property tax on the same types of assets located in Georgia, including property transferred under rent, usufruct or any similar type of arrangement. The Georgia property tax for companies and organizations must not exceed 1%.
Excise tax rates are fixed per physical unit of excisable good and vary from product to product. Alcoholic beverages, tobacco products, oil & gas cars, and mobile communication services are generally subject to excise taxation in Georgia.
Apart from these, the three free industrial zones located in Georgia namely, Poti FIZ, Hualing Kutaisi FIZ, and Tbilisi FIZ also have tax incentives. The companies that are operating in one of these zones can benefit from 0% tax on corporate income, import, and property tax as well as significantly reduced VAT rates. Furthermore, all Georgian companies that produce goods for export can opt for a special Internal Processing Customs Regime license. Such a license permits the importation of raw materials which are used for the production of goods to be exported into the country without paying customs duties and VAT.
We at Business Setup Worldwide utilize our knowledge to provide companies with a range of effective solution. Our Georgia tax services in include:
Feel free to contact us to avail the services – we’d be happy to assist you.