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Georgia

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Taxes

Tax residency – A LLC is tax-resident in Georgia if it is incorporated under Georgian laws.

Basis – Corporate income tax is levied on worldwide income.

Tax rate – Georgia levies a 15% corporate tax on dividends distributed. Profits retained in an LLC are not subject to taxation.

Capital gains – Capital gains are treated as ordinary income and taxed when distributed to shareholders.

Dividends – Dividends received by resident entities are not subject to taxation.

Interests – Interests received that were taxed at source are entitled to a credit on tax paid. Other interest income is subject to tax when distributed in the form of dividends.

Royalties – Royalties are subject to corporate tax upon distribution in the form of dividends.

Withholding Taxes – Dividends paid to non-residents are subject to a 5% withholding tax unless a tax treaty provides a reduced rate. Withholding tax rate on dividends could be increased to 15% if are paid to a resident of a low tax jurisdiction. Interests paid abroad are subject to a 5% withholding tax, unless the rate is reduced under a tax treaty. If interest is paid to a low tax jurisdiction, the tax rate is increased to 15%. Royalties paid to non-residents are also subject to a 5% withholding tax. Those paid to resident individuals are taxed at 20%, and those paid to a company resident of a low tax jurisdiction are taxed at 15%. Technical service fees paid to non-residents are subject to a 10% withholding tax, 15% to residents of low tax jurisdictions.

Foreign-source income – Foreign-source income is generally subject to corporate income tax when it is distributed in the form of dividends. Taxes withheld abroad can be offset against the corporate income tax.

Labor taxes – There are no social security contributions in Georgia.

Losses – Losses may be carried forward 5 years, or 10 years in certain cases. Carryback of losses is not allowed.

Inventory – Companies are entitled to record the cost of inventory using the individual accounting method, the averagely weighted cost method, or first in first out (FIFO).

Anti-avoidance rules – Transfer pricing legislation is applicable to all types of transactions between related persons, whether resident or non-resident, which must be conducted at arm’s length according to the OECD’s principles and supported by relevant documentation.

There are no thin capitalization and controlled foreign company rules.

Tax credits and incentives – A corporate income tax exemption may be available for income of budgetary, international, and charitable organizations, profits received from financial services conducted by international financial companies and gains on sales of securities issued by international financial companies.

Enterprises located in free industrial zones are exempt from corporate income tax, customs duties, V.A.T., property taxes and personal income tax (employees). A Free Industrial Zone enterprise is subject to a 4% tax on the market price of the goods supplied/received to/from a Georgian resident other than other Free Industrial Zone enterprise.

Personal income tax – Tax residents in Georgia are those who reside for at least 183 days in Georgian territory.

Tax residents are only taxed on their Georgian-source income. This means that income earned abroad is not subject to Georgian taxation.

The flat tax rate is 20%, although dividend, interest income is taxed at a 5% final withholding tax on source and not included in personal tax base.

Rental income from residential properties are also subject to a reduced 5% tax rate, provided that no deductions are taken from this income.

Capital Gains are usually subject to income standard tax rate, but an exemption may apply from gains on the sale of real property, if it has been held at least two years. Gains on the sale of a residential property with an attached land plot is subject to a reduced tax rate of 5%.

Other taxes – There is a real property tax for individuals ranging from 0.8% to 1% on the property market value. However, households with annual income below GEL 40,000 are exempted and those with annual income between GEL 40,000 and GEL 100,000 are subject to a reduced tax rate ranging from 0.05% and 0.2% on the property market value.

Property tax for companies is 1% on the annual average residual value of fixed assets (except for land) and investment property.

There is an annual land tax which varies according to the administrative unit, the type of land (agricultural or non-agricultural) and its land quality. 

In Georgia, there are no net wealth, inheritance or transfer taxes. Gifts of certain value may be subject to taxation.

V.A.T. standard rate is 18%. Certain goods and services transactions are tax exempt.

  • Tax transparent entity
  • Offshore Income Tax Exemption
  • Offshore capital gains tax exemption
  • Offshore dividends tax exemption
  • CFC Rules
  • Thin Capitalisation Rules
  • Patent Box
  • Tax Incentives & Credits
  • Property Tax
  • Wealth tax
  • Estate inheritance tax
  • Transfer tax
  • Capital duties
  • 15% Offshore Income Tax Rate
  • 15% Corporate Tax Rate
  • 15% Capital Gains Tax Rate
  • 0% Dividends Received
  • 5% Dividends Withholding Tax Rate
  • 5% Interests Withholding Tax Rate
  • 5% Royalties Withholding Tax Rate
  • 0 Losses carryback (years)
  • 5 Losses carryforward (years)
  • FIFOAverage cost Inventory methods permitted
  • 269 Tax time (hours)
  • 5 Tax payments per year
  • 0% Social Security Employee
  • 0% Social Security Employer
  • 20% Personal Income Tax Rate
  • 18% VAT Rate
  • 49 Tax Treaties

Country details

Georgia
GEL
Tbilisi
Asia
ka, Russian, hy, az
4,630,000

Georgia is the former Soviet Republic, located on the border between Europe and Asia, on the east coast of the Black Sea. It shares a border with Russia to the north, with Turkey and Armenia to the south, and Azerbaijan to the southeast. It has a population of just over 3.7 million inhabitants, which half live in Tbilisi, its capital. Its official language is Georgian and its currency is the Georgian Lari (GEL).

The Georgian economy depends mainly on Black Sea tourism, crops of citrus, tea, and grapes, extractive mining of manganese and copper as well as a small industrial sector producing wine, metals, machinery, chemicals, and textiles.

Due to its strategic location, its liberal and market-oriented economic policy and its developed transport infrastructure, Georgia is an attractive destination for foreign investment. A business-friendly country with simplified administrative procedures, where it is possible to set up a company in less than 3 days, and a reduced number of licenses and permissions. In addition, Georgia is considered by the World Economic Forum as the ninth economy with the lowest taxes, with only 6 low rates tax figures, where corporate profits are only taxed when distributed and foreign-source personal income is usually exempt from taxation.

It also has free trade agreements with the EU and the EFTA countries, Russia, and other countries of Eastern and Central Europe. Providing access to a market of 900 million people without any duty tariff restriction, and a system of generalized preference with US, Canada, Japan, Norway, and Switzerland.

Tax treaties

Country Type Date Signed
Swaziland DTC  2013-11-06
Hungary DTC  2012-02-16
Norway DTC  2011-11-10
Turkmenistan DTC  1997-12-05
Israel DTC  2010-05-12
United Arab Emirates DTC  2010-11-25
Netherlands DTC  2002-03-21
Finland DTC  2007-10-11
Italy DTC  2000-10-31
Denmark DTC  2007-10-10
Malta DTC  2009-10-23
Germany DTC  2006-06-01
Bulgaria DTC  1998-11-26
India DTC  2011-08-24
Romania DTC  1997-12-11
Switzerland DTC  2010-06-15
Serbia DTC  2012-04-04
Estonia DTC  2006-12-18
Turkey DTC  2007-11-21
Russian Federation DTC  1999-08-04
United Kingdom DTC  2004-07-13
Poland DTC  1999-11-05
Spain DTC  2010-06-07
Slovakia DTC  2011-10-27
Lithuania DTC  2003-09-11
Uzbekistan DTC  1996-05-28
Egypt DTC  2010-05-25
Kuwait DTC  2011-10-13
Austria DTC  2005-04-11
China DTC  2005-06-22
Ukraine DTC  1997-02-14
Japan DTC  1986-01-18
Azerbaijan DTC  1997-02-18
Bahrain DTC  2011-07-18
Singapore DTC  2009-11-17
Armenia DTC  1997-11-18
Latvia DTC  2004-10-13
Kazakhstan DTC  1997-11-11
Belgium DTC  2000-12-14
Croatia DTC  2013-01-18
San Marino DTC  2012-09-28
Greece DTC  1999-05-10
Czech Republic DTC  2006-05-23
Qatar DTC  2010-12-20
Slovenia DTC  2012-12-07
Iran DTC  1996-11-03
Ireland DTC  2008-11-20
France DTC  2007-03-07
Luxembourg DTC  2007-10-15

Tax treaties Map

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