Taxation in Georgia: Georgia, a country in the Caucasus region, is located on a crossroad between European and Asian markets. Due to Georgia’s business advantages, such as a low-cost workforce, a stable political environment, an attractive tax regime, and a well-developed infrastructure, an increasing number of foreign investors choose to outsource their business activities in Georgia. Moreover, in order to boost the country’s economy, the government of Georgia has concluded bilateral investment treaties with 32 countries.
At present, foreign direct investments comprise almost 10% of the country’s GDP. According to the Georgian National Investment Agency, foreign entrepreneurs mostly choose to develop businesses within the sectors of transport, communication, finance, and construction. One of the main advantages of establishing a company in Georgia is its favorable tax regime.
Georgia imposes six major taxes, no one of which exceeds 20%. More specifically, Georgia levies the following taxes: 1) corporate income tax, 2) personal income tax, 3) VAT, (4) import tax, 5) property tax, and 6) excise duties. Below, we will provide a brief overview of the general aspects of corporate and individual taxation in Georgian.
Corporate taxation in Georgia
Companies are considered to be subject to Georgian taxation if their place of management is located in Georgia. Georgian corporate income tax is levied on the worldwide income of resident companies. Foreign companies are taxed on their income derived from Georgian sources. However, in order to avoid double taxation, Georgia has signed tax treaties with 52 countries. The rates of the main Georgian corporate taxes are as follows:
- Corporate income tax: 15%;
- Value Added Tax (VAT): 18%;
- Import taxes fluctuate between 0% and 12%;
- Property tax does not exceed 1%.
In Georgia, there are no payroll, social security, capital gains, wealth, and inheritance taxes. Also, it should be noted that excise duties are levied only on selected types of goods, i.e., alcohol, tobacco, oil, gas, automobiles, and mobile communication services.
A tax rate of 5% applies for dividends and interest. The property tax is levied on a local level while all other taxes are national. Georgia does not impose a payroll tax, social security contributions, capital gains, wealth or insurance tax.
Individuals in Georgia are subject to the personal income tax levied on their Georgian-source income. An individual is a tax resident in Georgia if he or she spends more than 183 days in the country during a 12-month period.
Foreign investors in Georgia benefit from an extensive double tax treaty network signed with more than 47 countries. The Free Industrial Zones in Georgia have special tax rates and benefits for enterprises that operate within the designated areas.
Our lawyers in Georgia can help you with detailed information about taxation in Georgia, according to the type of company and business you perform.
Georgia’s secret to economic success lies in its low taxation and openness towards foreign investors. The country has been working on investing in key areas over the years and has never stopped encouraging business owners to open companies there. The reforms imposed in the country lead to the creation of a favorable market environment and, thanks to this careful planning and attention, Georgia is the country of choice for investors in numerous business areas.
While investing in Georgia may be facile, our Business Register Georgia lawyers are qualified to assist and help you with information about taxation in Georgia and any legal or corporate issues.