Georgia tax system - taxation of Georgian companies and individuals: VAT, income tax and capital gains. Tax treaties of Georgia

Income of individuals is taxed at a flat 20% rate.

Sole proprietorships with annual turnover under GEL 500 000 may register as a small business and pay tax of 1% of their turnover. The rate increases to 3% if the annual turnover exceeds GEL 500 000.

Individuals with annual turnover under GEL 30 000 who have no employees and are registered as a micro business are exempt from business income tax.

Resident enterprises are imposed with corporate income tax on their worldwide income.

Corporate income tax is charged at a flat 15% rate.

Since 1 January 2023, the 20% corporate income tax rate applies to commercial banks, credit institutions, microfinance institutions and credit providers.

The standard VAT rate is 18% and applies to the supply of all goods and services for remuneration in the territory of Georgia as part of economic activity.

A person registered in Georgia must register as a VAT payer if their taxable turnover exceeds GEL 100 000 in any continuous 12-month period.

Non-resident enterprises that receive income from Georgian sources, except for a permanent establishment, are imposed with withholding tax at the following rates:

• Dividends – 5%;
• Interest – 5%;
• Royalties – 5%;
• Income from services provided in Georgia – 10%;
• Other income from Georgian sources – 10%.

Payments of interest, royalties or other income from sources in Georgia to non-residents incorporated in so-called countries of the blacklist are subject to 15% withholding tax.

Real estate tax rates in Georgia depend on the amount of annual income of the individual, their tax residency and sources of income in and outside Georgia.

Real estate tax rate varies between 0,05% and 0,2% of the market value of the property located in Georgia if the worldwide income of the family is between GEL 40 000 and GEL 100 000 during the reporting calendar year.

However, if the family income exceeds GEL 100 000, the tax rate will vary between 0,8% and 1%.

The annual land tax rate for agricultural land varies depending on the administrative unit and quality of land.

The basic tax rate for 1 hectare of agricultural land varies between GEL 5 and GEL 100. Then the tax is adjusted using the territorial coefficient (up to 150%) depending on the location.

The basic tax rate for non-agricultural land is GEL 0,24 for one square meter, which is additionally adjusted by the territorial coefficient, which does not exceed 150%.

None.

In Georgia, there are no social security contributions.

Pension contributions:

Since 1 January 2019, joining the pension plan is compulsory for all employees, except for:

• people who had turned 60 (55 for women) before the law came into force;
• self-employed people.

Pension scheme is financed by the employer, employee and the state as follows:

• Each employer when paying salary transfers 2% of the employee’s salary to their private pension account;
• Each employer transfers 2% of the employee’s salary to the private pension account on behalf of its employee;
• Each self-employed person transfers to the individual pension account 4% of their annual income;
• The government transfers 1% or 2% of the income to the individual pension account depending on the amount of the personal income, but not more than GEL 60 000.

None.

Transfer pricing rules are generally based on the OECD arm’s length principle adopted in tax treaties and most countries when introducing internal rules of transfer pricing.

Georgia has entered into 58 Double Tax Conventions (DTCs) with the following jurisdictions:

58 DTCs: Armenia Austria Azerbaijan Bahrain Belarus Belgium Bulgaria China Croatia Cyprus Czech Republic Denmark Egypt Estonia Finland France Germany Greece Hong Kong Hungary Iceland India Iran Ireland Israel Italy Japan Kazakhstan Korea Kuwait Kyrgyzstan Latvia Liechtenstein Lithuania Luxembourg Malta Moldova Netherlands Norway Poland Portugal Qatar Romania San Marino Saudi Arabia Serbia Singapore Slovak Republic Slovenia Spain Sweden Switzerland Turkey Turkmenistan Ukraine United Arab Emirates United Kingdom Uzbekistan.

In addition, Georgia has signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). The Multilateral Convention came into force for Georgia on 1 July 2019.

There are no foreign exchange controls in Georgia.