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Taxation System in Georgia

Georgia Tax | Corporate Tax

As per the Georgia tax regime passed as on 1st of January 2017, Georgian companies will be liable for the annual tax if the corporate profits are distributed. As per the new Georgia tax structure, it is applicable to the companies formed in Georgia and Permanent Establishments of non-resident companies. The Georgia tax levied on the Georgian resident companies and PEs of non-resident companies are based on the distributed profits including:

Profits that are distributed, expenses incurred, payments that are made on other than the economic activities, gratuitous supplies of goods/services and/or transfers of funds and amount of representation expenses exceeding the maximum amount set out in the tax code.

Georgia Quick Tax Facts for Companies
Corporate income tax rate 15% (from 1 January 2017)
Branch tax rate 0 %
Capital gains tax rate0 %
Basis of taxation for residentsWorldwide
Abroad Participation Exemption No
Loss relief
- Carryforward
For 5 years
− CarrybackNone
Double taxation relief
Yes
Tax consolidationNone
Transfer pricing rulesYes
Thin capitalization rulesNone
Controlled foreign company rulesNone
Withholding Tax
− Dividends5%
− Interest5%
− Royalties5%
− Branch remittance tax0%
Capital taxNone
Real estate transfer taxNone
Stamp DutyNone
Social Security Contribution (PRSI)None
VAT
18% (certain transactions are exempt)

Georgia Tax | Withholding Taxes

Dividends

5% withholding taxes are applied on the dividends that are paid to the non-resident companies, non-commercial individuals (resident/non-resident). The tax may vary if there is a signed tax treaty between the parties.

Interest

5% withholding tax is applied on the interest paid to the resident or a Permanent Establish of non-resident or individuals working on behalf of the PE, Companies or non-resident companies without a PE. The withholding tax may vary depending on the Georgia tax  treaty signed between the parties. The withholding tax will increase to 15% if the interest is paid to a non-resident company in low-tax jurisdiction.

Royalties

5 % and 20 % of the withholding tax are applied on the royalties paid to the non-resident or a resident person (apart from the individual who pays e VAT). The rate may reduce if there is a tax treaty signed between the parties. The withholding tax will increase to 15% if the interest is paid to a non-resident company in low-tax jurisdiction.

Branch Remittance Tax

None

Georgia Tax | Wage Tax/Social security Contributions

Wage Tax/Social Security Contributions

The social security tax and payroll tax are not applicable.

Georgia Tax | Value Added Tax

Value Added Tax

The standard rate of 18% VAT is applicable on certain transactions under taxable category as per the business segment and commercial transactions of the Georgian company. As per the standard tax structure followed in Georgia, VAT is applicable to some of the companies in Georgia and to make payment companies should be registered with VAT. For certain cases the VAT is voluntary while for some cases it is mandatory. Some of the taxable transactions as per the government of Georgia will be incurring 18% of VAT. It includes:

– transfer of Goods and services manufactured and delivered in Georgia;
– transfer of Goods and services for non-economic purposes (taxpayer should have VAT credit for such products or services);
– transfer of goods or services in exchange of the shares of Georgian company;
– good and services that is supplied by the taxpayer to the employees,
– goods exported out of Georgia,
– goods import into Georgia.

Georgia Tax | Filing and payment

Georgia follows a self-assessment process. The tax returns for the taxes levied on the distributed profit should be filed by the 15th of every month following the reporting calendar month. For rest of the Georgia tax payers, the date for filing the income tax returns is 1st of April in a calendar year. The last date for the same may be extended for three months. Georgia tax payers can make advance payment of the taxes in four instalments in a calendar year. Those who fall under the distributed profit tax payers’ category cannot make advance payment.

Georgia Tax | Accounting, Filing and Auditing Requirements

Company should prepare the annual financial statements. As per the law of accounting and financial audits, it is mandatory for the companies to submit documents like financial statements, management reports, statements of payments made to the state and audit opinions, etc., ) be submitted by 9th of month for certain categories of entities defined in the law.

Georgia Tax | Real Estate Tax

The taxes on real estate property is levied by the local authorities and it does not exceed the maximum limit of 1% over the residual value of the asset, investment property, equipment (uninstalled) and in-progress construction that are recorded annually in the books of company’s accounting balance sheet

Georgia Tax | Transfer Tax

None

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