Georgia Accounting and Tax Considerations

Georgia accounting and tax services

Many clients choose to outsource their Georgia accounting and tax obligations to Tetra Consultants. Our accounting and tax team will timely complete your firm’s financial statements, corporate tax returns and manage auditors on your behalf and without the need to travel.

By outsourcing accounting and tax obligations to Tetra Consultants, you can enjoy reduced overhead costs and timely reporting and filings. Our accounting team will explain to our clients all required deadlines and expectations before the start of every engagement.

Thereafter, Tetra Consultants will prepare the required fillings in advance to ensure we meet all stipulated deadlines agreed at the start of the engagement.

Tetra Consultants will send a weekly or bi-weekly update to our clients, ensuring all parties are aware of upcoming deadlines. Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.

According to Georgia Tax Authority, there are five taxes imposed at the national level: corporate income tax, personal income tax, excise tax, customs tax, and value-added tax. Property tax is levied at the municipal level. Land tax is levied as a component of the property tax. 

Corporate tax

• Georgian entities and foreign entities doing business in Georgia through a permanent establishment will no longer need to determine taxable gross income and allowable deductions in order to arrive at the taxable profits. They rather should apply a standard corporate income tax rate of 15% on grossed-up profits once they are distributed or deemed distributed to shareholders being a nonresident or an individual.

Dividends 

• While paying dividends to individuals and foreign entities not having a permanent establishment in Georgia the companies must withhold tax at a rate of 5%. A lower rate may apply under a relevant tax treaty.

Property tax 

• Property tax is payable at a maximum rate of 1% on the annual average residual value of fixed assets (except land) on the balance sheet of Georgian entities or foreign entities with taxable property in Georgia.

Withholding taxes 

Except for employers operating in a FIZ, employers are required to withhold personal income tax at source on a monthly basis from their employees’ salaries.

• Payments of interest are generally subject to 5% withholding tax, although several exemptions exist. 
• Interest payments to non-residents registered in blacklisted countries are subject to 15% withholding tax. 
• Payments of royalties to non-residents are subject to 5% withholding tax, though when the recipient is registered in the blacklisted country the taxable rate would comprise 15%. Dividend payments (except to another Georgian entity) are subject to a 5% withholding tax. 

Value Added Tax (VAT)

• Taxpayers are required to register for VAT if their sales for the 12 preceding calendar months exceeded GEL 100,000, or if they produce or import excisable goods. Taxpayers must also register if they make a one-off taxable transaction in the course of economic activity in an amount exceeding GEL 100,000.

Penalties 

• Operating without VAT registration is subject to a penalty of 5% of the VAT taxable operations.   

VAT Registration requirements 

• Tax registration is conducted together with state registration with the National Agency of Public Registry. The registration process should take no more than one day once all required documentation is obtained and submitted to the relevant authority. Persons subject to VAT are required to separately register for VAT.

Corporate tax returns and payments 

• Since 1st January 2010, all taxpayers have been required to file tax returns electronically. Corporate income tax in 2017 Georgia switched to a new model (Estonian model) of taxation of companies’ profits. This means that Georgian companies and non-residents having a permanent establishment in Georgia is no longer subject to corporate income tax on the accrued profits but should levy tax once they are distributed. 
• Under the new model, they are required to submit their corporate income tax return (also referred to as the profit tax return) and pay the corresponding taxes on monthly bases before the 15th of the following month.
• A taxpayer with no corporate income tax payable for the previous year is not required to make advance payments. Individual income tax Individuals receiving Georgian source income without taxation at the source of payment should submit an income tax declaration and pay the corresponding taxes before 1 April of the following reporting year. 

VAT Returns and payments

• The accounting period for VAT is a calendar month. A taxpayer is required to submit the VAT return and pay the respective tax to the local tax authorities within 15 days after the end of the accounting period. 

Property (and land) tax 

Enterprises must submit property and land tax declarations before 1 April of the year following the year for which taxes are being assessed: 

• Property tax is paid in two installments. Advance payment is made on 15 June, equal to the property tax payable for the previous year. The balance is then due before 1 April of the following year, when the property tax return for the year is filed. 
• The amount of land tax is subject to assessment by the authorities and must be paid before 15 November. Individuals are subject to different rules. They are required to submit property and land tax returns before 1 November and to pay the corresponding taxes before 15 November.

Double Taxation Avoidance Agreements (DTAAs) 

Georgia has signed more than 50 Double Taxation Avoidance Agreements (DTAAs) with other countries. 

Contact us now for a free consultation. Our team of experts will revert within the next 24 hours.