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Guide to Taxes in Georgia 2024: Income, Corporate, VAT, and More

Corporate Income Tax Georgia 2024

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Taxes can be a major headache for any business owner. But Georgia aims to change that. It offers a tax system focused on simplicity and attracting foreign businesses. Yes, Georgia stands out with one of the lowest tax rates in the world and is the go-to destination for businesses to optimize their taxes


This guide from Gegidze will break down the details of the Georgian tax landscape step by step.



Understanding Georgian tax rates


Corporate income tax in country georgia


Corporate income tax


A tax charged on the profits earned by corporations, limited liability companies (LLCs), and other similar business entities.


One of the lowest corporate income tax rates (Profit Tax) in Georgia


In the country of Georgia, both resident and non-resident enterprises are subject to Corporate Income Tax (CIT) on their income at a flat rate of 15%. 


For LLCs and other legal entities within Georgia, CIT applies only when profits are distributed. This means that profits reinvested into the company remain untaxed.


P.S. banks, microfinance organizations, and similar financial institutions are subject to a slightly higher 20% CIT rate.


What triggers CIT payments?


Georgia's unique system focuses on how you use your profits rather than taxing them immediately.  Here's when the CIT typically kicks in:


  • Profit Distributions: When you pay out dividends to shareholders, those amounts are generally subject to CIT (with some exceptions).

  • Non-Business Expenses: Spending money on things unrelated to growing your business could trigger CIT.

  • Giving Things Away: Free products, services, and even unexplained inventory shortages are treated like profit distributions.

  • Excessive Spending: Those "representative expenses" (for client entertainment, etc.) have limits – exceed them, and you might get taxed on the extra.


It applies to:


  1. Resident companies (those headquartered in Georgia) on their worldwide income


If your business is headquartered in Georgia, you're considered a resident company. This means you'll pay the corporate tax rate (CIT) in Georgia on all your income, even that earned in other countries. 

Example: A Tbilisi-based software startup lands clients in Europe. Despite the international source of profits, they'll still pay Georgia business tax rates on their entire income.


2. Non-resident companies on the income they generate within Georgia


If you operate a business outside of Georgia but make money within the country (and have a physical presence like an office or branch), you'll pay CIT only on that Georgia-sourced income. It's a fair approach, ensuring you contribute taxes where you're actively doing business.

Example: A UK company establishes a manufacturing branch in Batumi. They'll pay CIT exclusively on the profits generated by that specific Batumi operation.


Special tax statuses


  • Virtual Zone Companies: Companies operating within designated "Virtual Zones" enjoy a 0% CIT rate. It applies mainly to specific IT-related activities.

  • Free Industrial Zones (FIZ): Businesses established within a FIZ are also exempt from CIT, they are tax-free in Georgia. (0%).

  • International Company Status: Companies holding this status benefit from a reduced 5% CIT rate upon profit distribution.


Let's get practical


  • Company A (Resident): Decides to distribute 20% of its profits as dividends. That portion gets taxed at the standard 15% CIT rate.

  • Company B (Non-Resident): Incurs some expenses that aren't directly related to its business operations in Georgia. Those costs would also be subject to the 15% CIT rate.



Aspect

Detail

General Tax Rate

15%

For Financial Institutions

20%

Resident Companies

Taxed on worldwide income

Non-Resident Companies

Taxed on income generated within Georgia

CIT Triggers

Profit Distributions, Non-Business Expenses, Free Products/Services, Excessive Representative Expenses


Special Tax Incentives

Virtual Zone Companies

0% CIT rate for companies operating within designated "Virtual Zones"

Free Industrial Zones (FIZ)

0% CIT rate for businesses established within Free Industrial Zones (FIZ)

International Company Status

Reduced 5% CIT rate upon profit distribution for companies with International Company Status


Withholding corporate taxes in Georgia


When non-residents earn certain types of income from sources within Georgia, the country withholds a portion as an upfront tax payment. Here's a breakdown of the key areas:


Dividends


  • Dividends paid to non-resident entities are typically subject to a 5% withholding tax.

  • This rate might be reduced if Georgia has a double taxation with the entity's home country.


Interest


  • Interest income earned by non-residents from Georgian sources is also subject to a 5% withholding tax.

  • Similar to dividends, this rate may be lowered if a tax treaty applies.


Royalties


  • Royalties paid to non-residents for the use of property or rights in Georgia are taxed at a withholding rate of 5%.

  • Tax treaties can potentially provide for a reduced rate.


Other withholding taxes


  • Other types of payments to non-residents have specific withholding tax percentages in Georgia:

  • Oil and gas subcontractor income: Generally 4%

  • Income from international transportation/communication: Generally 10%

  • Income from services rendered in Georgia: 10%

  • Certain payments to entities in 'blacklisted' countries: 15%



Why is Georgia the best destination for foreign businesses?


Georgia has emerged as a compelling destination for entrepreneurs and businesses worldwide.  With a favorable tax system, a supportive business environment, and a strategic location, Georgia offers a unique opportunity for growth and success. Here's a closer look at the key advantages:


  • Tax Simplicity: Georgia boasts one of the most straightforward tax structures in the region. Its flat corporate income tax rate and zero tax on reinvested profits mean you keep more of what you earn.

  • Ease of Doing Business: Georgia consistently ranks high in international "ease of doing business" indices, reflecting its streamlined regulations and minimal red tape when establishing and running a company.

  • Open Economy: Enjoy unhindered access to growing regional markets and trade agreements with global economic powers, facilitating the movement of goods and services.

  • Strategic Hub: Georgia's location between Europe and Asia makes it an ideal base for businesses targeting diverse markets across these major continents.



United Kingdom (UK) businesses invested 392 million dollars in Georgia in 2023


United Kingdom UK businesses invested in Georgia


Source: geostat.ge


Recent data reveals the United Kingdom as the frontrunner in foreign direct investment (FDI) into Georgia in 2023. 


As one of the world's most active startup regions, the UK's leading investment underscores the potential for dynamic partnerships and innovative growth within Georgia's business landscape.


The UK is followed by other nations contributing to Georgia's economic growth, including the Netherlands, Turkey, the United States, Russia, Malta, Azerbaijan, China, Japan, and Kazakhstan.


This top investor list underscores the growing international interest in Georgia's business landscape. Countries from Europe, Asia, and North America all play a role in driving investment into Georgia.


Foreign direct investment by the economic sector



Foreign direct investment by the economic sector


Source: geostat.ge


Analysis of foreign direct investment flows in Georgia reveals their concentration within specific economic sectors. 


Understanding where FDI is directed highlights both Georgia's areas of strength and the industries that international investors perceive as offering the greatest potential for returns.


Foreign Direct Investments in Georgia (2020-2023)


Georgia's position on the global investment stage is rapidly changing. Foreign direct investment (FDI) into the country demonstrates a significant upward trajectory. This surge in FDI signals growing international recognition of Georgia's economic potential and its favorable business environment.


Million USD.

Year

2020

2021

2022

2023*

Total

595.3

1 252.7

2 097.9

1 594.7

Q I

175.8

145.6

577.9

566.4

Q II

247.4

320.6

389.2

505.7

Q III

295.8

376.1

820.3

316.0

Q IV

-123.7

410.4

310.5

206.5


Source: Geostat.ge



Personal Income Tax (PIT)



Personal Income Tax in Georgia


What are the income tax rates in the Country of Georgia?


Georgia's income tax system aims for a balance of fairness and growth. Individuals face a flat 20% rate, while businesses benefit from special breaks designed to help them flourish.  Small and micro businesses could see income tax rates as low as 1% or 3%.


  • Rental Income: If you earn money renting out residential property in Georgia, you'll face a simple 5% tax rate.

  • Property and Vehicle Sales: Selling a house, apartment, or vehicle in Georgia? The proceeds are generally taxed at a 5% rate, but specific exemptions might apply.

  • Capital Gains (Foreign Investments): Selling stocks, bonds, or other non-Georgian securities usually results in a 0% tax on your gains. (Always consult a tax professional for complex situations.)

  • Cryptocurrency Gains: Currently, cryptocurrency gains in Georgia are taxed at 0%. This reflects the evolving legal status of crypto in the country.

  • Foreign Dividends: If you're a passive shareholder receiving dividends from foreign companies, you typically won't pay any Georgian tax on them (0%). However, managing a foreign company from Georgia can complicate the situation.


Category

Tax Rate

Standard PIT

20%

Small Business (Turnover up to 500,000 GEL)

1%

Small Business (Turnover above 500,000 GEL)

3%

Micro Business

0%

Rental Income

5%

Sale of Property/Vehicles

5%

Capital Gains on Foreign Investments

0%*

Cryptocurrency Gains

0%

Foreign Dividends

0%**


Lower taxes for local and international startups & small businesses


Georgia recognizes the crucial role small and medium-sized enterprises (SMEs) play in driving economic growth and creating jobs. To support these vital engines of innovation, Georgia has designed a tax system that actively encourages entrepreneurship. This welcoming approach applies to local startups and international businesses establishing a presence in the country.

Taxes in Georgia won't cripple your growth. The focus is on competitive rates and smart incentives, including special tax breaks for small and medium-sized businesses.


Here payroll management is also simple.  Georgia's system is designed for simplicity, with straightforward income tax withholding and reasonable pension contribution requirements.



Filing your Georgian tax return



Filling your Georgia tax return


  1. Understand your filing status: Are you a resident, or non-resident, or do you have income categories requiring reporting?

  2. Know your deadlines: Check the Georgian tax authorities' website for the latest information on annual and capital gains filing deadlines.

  3. Organize records: Gather documents for income, deductions, and any relevant transactions.

  4. Prepare & submit a return: Use official forms and follow instructions provided by the Georgian tax authorities.

  5. Make payments: Pay estimated amounts (if applicable) and any final tax due by the deadlines.



Value-Added Tax (VAT) in Georgia



Value-Added Tax (VAT) in Georgia


VAT is a tax applied at each stage of the supply chain for most goods and services sold within Georgia


Key points about VAT in Georgia


  • Standard Rate: Georgia's VAT rate is currently 18%.

  • What's Taxed: VAT generally applies to anything sold in Georgia as part of a business activity. However, there are specific exemptions.

  • Location Matters: Where goods are located, and where a service is provided or received, are crucial factors for determining what's taxed. There are special rules for businesses operating across borders.

  • Registration: If your business's turnover (sales) exceeds 100,000 Georgian lari in 12 months, you're generally required to register as a VAT payer. However, you can apply for a VAT payer registration right after starting the business operations.

  • When VAT Applies: Typically, VAT becomes due when you supply goods or services. It also applies to advance payments you receive.


Exemptions and special cases


  • Exempt Supplies: Certain goods and services, such as specific financial or medical-related items, might be VAT-exempt.

  • Reverse-Charge VAT: If you're a Georgian VAT payer receiving services from a non-resident, you may be responsible for paying the VAT.

  • Digital Services: Businesses based outside Georgia, but providing digital services to Georgian consumers, likely need to register and comply with Georgian VAT rules.


VAT for digital businesses


If you provide digital services to Georgian consumers without being established in Georgia, you could have VAT obligations.  These rules are relatively new, so it's crucial to stay updated. 


Here's what triggers VAT:


  • Payments for your services go through a Georgian financial institution.

  • The consumer is located in Georgia.

  • The purchase is made using a device with a Georgian IP address.

  • The purchase uses a phone number with a Georgian country code.


Important deadlines


  • Reporting: Quarterly VAT reports are typically due on the 20th of the month following the reporting period.

  • Payment: VAT payments are generally due by the end of the month following the reporting period.


Aspect

Details

Standard Rate

18%

Taxable Transactions

Most goods and services sold within Georgia

Registration Threshold

Turnover exceeding 100,000 GEL (12-month period)

When VAT is Due

Upon supplying goods/services, also on advance payments

Exemptions

This may apply to specific financial, medical, or other items

Reverse-Charge

This may apply to services received from non-residents

Digital Services

Non-Georgian providers may have VAT obligations

Reporting & Payment

Quarterly reports, payments due monthly



Property tax rates and rental Income in Georgia


Property tax rates and rental Income in Georgia


Georgia offers a surprisingly affordable and straightforward process for foreign real estate investors. Let's break down the costs:


  • Stamp Duty / Purchase Taxes: No stamp duty or equivalent tax. Other costs related to property purchase are minimal, with property registration only costing ₾50-200 GEL ($20-80 USD).

  • Annual Property Tax: Varies by municipality, capped at 1% of appraised value. Households earning below GEL 40,000 are exempt. For incomes between GEL 40,000 and GEL 100,000, rates range from 0.05% to 0.2%. Above GEL 100,000, rates are from 0.8% to 1%.

  • Capital Gains Tax (CGT): A 5% tax on profits if sold within two years; no tax thereafter. For off-plan properties, official ownership starts upon registration.

  • Rental Income Tax: The standard rate is 20%, but registered landlords pay only 5% on residential rentals. Unregistered landlords also pay 20% but can deduct expenses. There is no limit on the number of properties for the reduced tax rate.


Cost Type

Details

Stamp Duty

None

Registration Fees

₾50-200 GEL ($20-80 USD)

Annual Property Tax

0.05% to 1% of appraised value, with exemptions

Capital Gains Tax (CGT)

5% if sold within 2 years, none after 2 years

Rental Income Tax

5% for registered landlords, 20% for unregistered (deductible expenses)


Georgian Import taxes


  • Variable Rates: Georgia's import taxes generally fall into three tiers: 0%, 5%, or 12%. The exact rate depends on the specific goods imported. You can find the correct rate using the product's classification code or by searching for its Georgian name on the relevant customs resources.

  • Special Permissions: Certain products may require additional permits to be imported. These permits typically cost 30 GEL to obtain.

  • Payment Deadlines: Import taxes are usually due within 5 days of your goods arriving at customs, though a different timeframe may be given at the time.

  • VAT Considerations: An additional 18% VAT may apply to imported goods. This is payable at the time of importation, regardless of whether the recipient is a VAT-registered business.

  • Exemptions:

    • Imports from select countries, including those within the EU, may be exempt from import tax. VAT might still apply.

    • Small shipments valued under 300 GEL are fully exempt from both import tax and VAT.



Crypto tax in Georgia


Georgia's crypto-friendly tax system makes it attractive for holders. Individual tax residents generally enjoy 0% tax on crypto trading profits, thanks to Georgia's territorial taxation and the classification of crypto as non-Georgian sourced income. The country also offers easy liquidation of Bitcoin and other cryptocurrencies into fiat currency, with some providers even facilitating direct exchange with commercial banks.


  • Ownership and Trading: Holding and trading crypto is legal in Georgia. Currently, for individual traders, tax rates on gains are generally 0%.

  • Crypto Mining Hub: Georgia's cheap hydroelectric power and minimal regulation make it a popular crypto mining location.

  • Legal Tender Status: While the Georgian Lari (GEL) is the only official currency, USD, GBP, and EUR accounts are easily accessible at local banks. You can even withdraw USD from ATMs.

  • Barter Potential: Though not legal tender, the current lack of regulation allows crypto to be used in barter-like exchanges (for example, when buying property). However, new regulations could emerge.


Important notes


  • Businesses: Crypto profits generated within a Georgian-registered business entity may be subject to corporate income tax and dividend tax rate upon distribution.

  • Small Business Status (SBS): Trading crypto while holding SBS is complex. While generally taxed at 0%, future regulations could change this.

  • Tax Residency: To enjoy these tax benefits, you generally need Georgian tax residency, achievable by either residing in Georgia for 183+ days per year or through the High Net Worth Individual program.

  • Exiting Previous Tax Systems: Simply becoming a Georgian tax resident may not immediately end your tax obligations to your previous country. Formal processes and, in some cases like the USA, citizenship renunciation, may be required.


Crypto regulations in the country of Georgia


Georgia, previously known for its minimal cryptocurrency regulation, has implemented new rules to enhance security and compliance. 


Here's what you need to know:


  • Risk Mitigation: Cryptocurrencies are considered as a high-risk asset that can be used for illegal activities like money laundering or terrorism financing. Georgia's regulations aim to reduce these risks.

  • Global Standards: The Financial Action Task Force (FATF), an international body combating financial crimes, recommended Georgia strengthen its crypto framework.


What's New?


  • Definition and Licensing: The law now defines "virtual assets" (including cryptocurrencies) and requires Virtual Asset Service Providers (VASPs) to register with Georgia's National Bank.

  • Accountability: VASPs must now implement measures to identify customers, monitor transactions, and prevent illegal activity.

  • Traceability: VASPs must share specific information when transferring crypto, improving the ability to track suspicious transactions.


Who’s affected?


  • Cryptocurrency exchanges (crypto-to-crypto, crypto-to-fiat, crypto-to-financial instruments)

  • Crypto asset transfer, storage, or custodial services

  • Cryptocurrency portfolio management services

  • Cryptocurrency trading platform operation

  • Cryptocurrency lending platforms

  • Initial Coin Offering (ICO) facilitation


Who is not affected?


  • Individual Users: For now, individual miners and casual traders are largely unaffected.



How to open an LLC in Georgia


Georgia ranks 7th in the world for ease of doing business, according to the World Bank's ratings of 190 economies.


So, Georgia's business-friendly approach and favorable tax structure make it an attractive destination for entrepreneurs.  Setting up a Limited Liability Company (LLC) offers specific advantages, including protection of personal assets and flexible profit distribution.  Let's dive into the process, tax implications, and key considerations for foreigners establishing an LLC in Georgia.


Understanding Georgian LLCs


  • Liability Protection for Owners: Unlike sole proprietorships, an LLC separates your business debts and obligations from your assets. This lowers your financial risk if the company faces difficulties.

  • Minimal Upfront Cost: Georgia doesn't require you to invest a specific amount of capital to start your LLC.

  • Flexible Ownership: One or more individuals or entities can own an LLC, and there's no residency requirement for directors.

  • Global Workforce: You can hire employees from within Georgia or internationally.

  • Tax Advantages: Profits retained within the company face a 0% corporate income tax. Distributions are taxed later at a competitive rate.

  • Special Note: LLCs generally don't qualify for the simplified "Small Business Status" tax regime.



Banking in Georgia: A guide for expatriates and locals


Georgia understands the needs of modern businesses. That's why, in many cases, you can open a business bank account online without ever setting foot in the country. 


Georgian banks


The Bank of Georgia and TBC dominate the Georgian banking sector, offering an extensive range of services with little to no distinction between them regarding product offerings, customer service, and national coverage. Their operational similarities extend to the account opening process, which is streamlined and accommodating for both local and international clients.


Bank of Georgia & Solo


The Bank of Georgia is a ubiquitous presence, offering a plethora of banking products including a variety of card services under the Mastercard, Visa, and American Express brands. The "Solo" premium service caters to high-net-worth individuals, providing enhanced banking features, personalized service, and access to luxury benefits such as VIP lounge access at airports globally.


TBC & TBC Concept


TBC mirrors the Bank of Georgia in its comprehensive service portfolio, including the innovative "TBC Subscription" card program and the "TBC Concept" for premium customers, offering tailored banking solutions and luxury perks akin to those provided by the Bank of Georgia's Solo service.


Alternative banking options


Beyond the big two, Georgia's banking landscape features several institutions catering to diverse needs:


  • Liberty Bank: Stands as the third largest bank, known for its extensive branch network and government payroll services.

  • ProCredit Bank: Focuses on small and medium-sized enterprises with a range of business account options.

  • Basisbank: Appeals to those with ties to China, offering both Visa and Mastercard options alongside UnionPay cards.

  • Cartu Bank: Established by Georgian billionaire Bidzina Ivanishvili, Cartu Bank targets the elite with high-end financial services and exclusive card offerings.

  • Ziraat Bank Georgia: Facilitates transactions with Turkey, offering accounts in Turkish Lira and a streamlined Internet banking system.

  • Tera Bank: Partly owned by The Dhabi Group, focusing on retail banking with a variety of card options.


Key tax facts


Tax Category

Rate

Details

Retained Profits

0%

Corporate Income Tax: Earnings kept within the company or reinvested are not taxed.

Profit Distribution

15%

Corporate Income Tax: Taxed at the time profits are distributed to shareholders.

Dividend Tax

5%

Personal Dividend Tax: This applies to individuals receiving distributions. Exemptions may apply for distributions to Georgian companies.

Employee Salaries

20%