Taxes

In any legal matter, including taxes, the main source to rely on is the law. In this case, it's the Tax Code of Georgia.

Foreign citizens have several options to legally conduct business in Georgia:

• register as a legal entity;
• obtain the status of an individual entrepreneur;
• obtain the taxpayer status as a physical person.

To obtain the taxpayer status, one must file an application with the Tax Service. There is also an option to register online on the Georgian Tax Service website.

1. Personal Income Tax (PIT) is a tax levied on the income of individuals received during the year. The tax rate is 20% and is withheld from the employee's salary. The PIT declaration must be filed by March 31 of the following year.
2. Value Added Tax (VAT) is a tax levied on the sale of goods and services in Georgia. The tax rate is 18%. Legal entities registered as VAT payers must submit tax reports every month no later than the 15th day of the following month.
3. Corporate Income Tax is a tax levied on the profits earned by legal entities. The tax rate is 15%. The declaration for corporate income tax must be submitted and paid no later than the 15th day of the following month.
4. Excise taxes are taxes levied on certain types of goods, such as tobacco, alcoholic beverages, cars, etc. Excise tax rates depend on the type of goods and may vary. The declaration must be submitted and paid no later than the 15th day of the following month.
5. Import Tax is a tax on goods imported and sold in Georgia. The tax rate ranges from 0.5% to 12% depending on the type of product and the exporting country.
6. Property Tax is levied on property owners in Georgia. The tax rate depends on the value of the property and can range from 0.1% to 1%. The declaration for property tax must be submitted by November 1 of the following year and paid by November 15 (Article 205 of the Tax Code).

A foreign citizen is entitled to a reduced income tax rate in case of opening an IE and obtaining the status of a micro or small business, namely:

• for a micro-business (with income up to 30,000 lari), the rate is 0%;
• for a small business with income up to 500,000 lari - 1%, above 500,000 lari - 3%.

In this case, a declaration must be filed every month, no later than the 15th of the following month.

However, if the profit exceeds 100,000 lari, there is an obligation to pay VAT at a rate of 18%. Only income earned in the Georgian market is taken into account (remote work from Georgia for companies registered in other countries does not fall into this category).

1. The following are regarded as general state taxes:

a) personal income tax;

b) tax on profits of legal entities;

c) value-added tax (VAT);

d) excise;

e) import tax.

2. Local tax includes property tax.

1. A resident is a physical person who is actually present in the territory of Georgia for 183 days or more during any continuous period of 12 calendar months ending in this tax year, or a physical person who was in a foreign state during this tax year. Georgia during the current tax year at the Georgian Civil Service.

2.1 The time during which a natural person was in Georgia shall not be included in the actual stay on the territory of Georgia:

a) as a person with diplomatic or consular status or a member of such a person's family;

b) as an employee of an international organization operating in accordance with an international agreement of Georgia, or as a person serving in a foreign state in Georgia, or a member of such a person's family, except for a citizen of Georgia;

c) when moving from one foreign state to another through the territory of Georgia;

d) for treatment or rest.

The taxpayer of the income tax is:

a) a resident natural person;

b) a non-resident natural person receiving income from a source in Georgia.

Special tax regimes are applied to:

a) individuals with microenterprise status;

b) individual entrepreneurs with small business status;

c) individuals with fixed tax payer status.

The taxable income of an individual with small entrepreneurship subject status is subject to a tax rate of 1 percent, except for cases provided for in part 2 of this article.

The taxable income of an individual with small business status is subject to a tax rate of 3 percent if their total income from economic activities exceeds 500,000 lari. Individuals with small business status are taxed at the rate established in accordance with this section from the beginning of the corresponding month (the month in which the threshold of cumulative income of 500,000 lari is exceeded) until the end of the calendar year.

1. Except for cases specified in Article 26 of this Code, individuals with the status of a micro enterprise shall submit a declaration to the tax authority at the place of tax registration before April 1 of the following reporting year:

• physical person with the status of a micro enterprise;

1.1. Submission of tax declaration by a person with the status of a small business entity to the tax authority and payment of tax shall be made no later than the 15th day of the month following the reporting period.

2. A physical person with the status of a micro enterprise shall submit a declaration to the tax authority within 30 working days after the termination of economic activity in Georgia.

The taxpayer of the profit tax is:

a) a resident enterprise;

b) a non-resident enterprise carrying out its activities in Georgia through a permanent representation and/or receiving income from a source in Georgia.

A resident's aggregate income consists of income from a source in Georgia and income earned outside of Georgia.

The total income of a non-resident consists of income earned from sources in Georgia.

Joint incomes include income received in any form and/or from any activity, namely:

a) income earned in the form of wages;

b) income earned from economic activity not related to employment;

c) other income not related to employment and economic activity.

A taxable person, unless otherwise provided by this Code, is obliged to pay VAT within 2 working days no later than the date of exceeding 100,000 lari of the total amount of operations for the supply of taxable VAT goods / provision of services carried out by it during any continuous 12 calendar months. To be registered, it is necessary to apply to the tax authority.

The taxpayer's obligation to calculate and pay VAT arises from the moment of the taxable transaction provided for in part one of this article (including this transaction), according to which the total amount of taxable transactions exceeded 100,000 lari.

A taxpayer has the right to a VAT refund if the amount of VAT subject to deduction exceeds the amount of VAT payable in the reporting period.

The grant recipient who has purchased goods and/or services under a grant agreement is entitled to take into account or recover the VAT paid for these goods (services) based on the submission of a tax invoice to the tax authority or a document confirming the payment of VAT to the budget with tax deduction.

In the case provided for in part 2 of this article, VAT shall be included or reimbursed upon submission by the recipient of the corresponding document to the tax authority within 3 months after the end of the month of the taxable transaction.

In the cases provided for in parts 1-3 of this article, the refund of value-added tax shall be made in the manner established by article 63 of this Code.

A foreign citizen has the right to a refund of the amount of VAT paid for these goods upon export of goods purchased in Georgia from the territory of Georgia.

In the case provided for in paragraph 5 of this article, VAT shall be refunded:

a) based on a special receipt issued by an authorized seller of goods;

b) if the goods are exported from Georgia within 3 months from the date of their purchase and the cost of the purchased goods per one receipt exceeds 200 lari (excluding VAT).

An enterprise (organization) submits a declaration on property tax to the relevant tax authority no later than April 1 of the calendar year and pays the property tax by the same deadline, except for the case provided for in paragraph 7 of this article. The declaration contains data on the property subject to tax for the last tax year, and on the land subject to tax - for the current tax year.

An enterprise/organization pays property tax for a land plot no later than November 15 of the calendar year.

An individual submits a declaration on property tax to the tax authority no later than November 1 of the calendar year. The declaration contains data on the property subject to tax for the last tax year, and on the land subject to tax - for the current tax year.

An individual pays property and land tax no later than November 15 of the calendar year.

Violation by a person of the procedure for registration as a taxpayer established by the legislation of Georgia entails imposing a fine on the person in the amount of 500 lari.

Entails imposing a fine in the amount of 5 to 10 percent of the amount of tax payable based on such declaration/calculation.

1. Reduction of the tax amount in the tax declaration/calculation by a person, if it is caused by a change in the tax control authority at the time (period) of the person's tax obligation, entails a penalty of 10 percent of the reduced tax amount.

2-5. Up to 50 percent, as well as criminal liability, depending on the reduced amount.