Taxes in Georgia
The tax system in Georgia is very interesting for both companies and individuals. According to the World Economic Forum's Global Competitiveness Report, Georgia is the ninth lowest-taxed economy in the world. Here are some of the important points that may interest you.
On company taxation
- Companies registered in Georgia are subject to a single corporation tax of 15% on their profits. But if the profits are reinvested in the company, it is O% tax.
- Interest, dividends and royalties are subject to a 5% tax.
- Professional fees are subject to a 10% deduction. If the recipient is a company resident in a proven tax haven, a withholding tax of 15% may apply.
- Beneficiaries of dividends from resident and non-resident entities are not considered profits and are therefore not taxable unless they come from a jurisdiction considered a tax haven.
- Capital income is included in the corporate income tax base.
- There is no minimum capitalisation, nor rules on the Control of Foreign Companies.
- The property tax is progressive and cannot exceed 1% of the average residual value of fixed assets, investment properties and buildings in progress.
- There are no employer contributions, no social security contributions on salaries, no stamp duty, no inheritance tax and no wealth tax.
- Its average custom duty rate is the lowest of all WTO countries at 1.5%.
- The VAT is 18%.
In addition, there are even more attractive tax incentives in the so-called Free Industrial Zone (FIZ) areas. Companies incorporated in these FIZs are exempt from corporation tax, import and export taxes, dividend taxes, VAT and property taxes. The only applicable tax is 4% on transactions between these free industrial zones and Georgian territory.
On Individual Taxation
- Tax residents are taxed only on their Georgian-source income. This means that income earned abroad is not subject to Georgian tax.
- The flat tax rate is 20%. Although Dividends, Royalties and Interest Income are taxed at 5% withholding tax, they are not included in the personal tax base.
On Real Estate Taxation
- Rental income from residential properties is also subject to a reduced tax rate of 5%.
- The sale of a residential property is subject to a reduced tax rate of 5%.
Individuals who own real estate are subject to a property tax ranging from 0.8% to 1% of the property market value. However, Households whose annual income is less than 40.000 GEL (16.500 USD) are exempt and those whose annual income is between 40.000 and 100.000 GEL (41.200 USD) are subject to a reduced tax rate of 0.05% to 0.2% of the value of the property.
For the latest tax rates and policies, visit the Revenue Service website in Tbilisi, Georgia.