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 rate | 0 % |
| Basis of taxation for residents | Worldwide |
| Abroad Participation Exemption | No |
| Loss relief | |
| - Carryforward | For 5 years |
| − Carryback | None |
| Double taxation relief | Yes |
| Tax consolidation | None |
| Transfer pricing rules | Yes |
| Thin capitalization rules | None |
| Controlled foreign company rules | None |
| Withholding Tax | |
| − Dividends | 5% |
| − Interest | 5% |
| − Royalties | 5% |
| − Branch remittance tax | 0% |
| Capital tax | None |
| Real estate transfer tax | None |
| Stamp Duty | None |
| 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
