Tax In Georgia Country Overview
Incredible Low Taxes (Nearly 0%) And A Good Reputation
Tax in Georgia country: Georgia stands in the 8th position in Doing Business ranking, and provides nice tax incentives for individuals and companies
Georgia Is A Low Tax Country
Over the past decade, Georgia has undertaken far-reaching reforms to its economy, simplifying business start-ups and all administrative procedures.
Today, Georgia offers an incredibly welcoming and business-friendly environment. Many business people and individual entrepreneurs consider Georgia an attractive place to start and invest. Taxes in Georgia Country are among the lowest in the world. Georgia Taxes and tax incentives benefit individuals, investors, and companies operating in the country. This Georgian straightforward tax policy is very favorable to economic growth and competitiveness.
Together with its dynamic and liberal economy, these factors make Georgia an attractive low tax country full of opportunities for those who choose to invest, start a business, or live there.
Taxes in Georgia Country: A Unique Territorial Taxation Regime in Europe
Thanks to its territorial tax system, unique in Europe, the foreign-source income of individuals is not subject to any taxation. Georgia is the only European country with a territorial taxation regime. It means that instead of taxing overall individual income (foreigners, residents, or non-residents), Georgia taxes only locally sourced income.
If appropriately structured, income from non-Georgian sources received by Georgia residents is fully exempt from taxation or subject to a 1% tax rate. Georgia Taxes rate could be very exciting, whether you are a digital nomad, e-commerce business owner, trader, or passive income owner.
Suppose you want to establish a tax residence in Georgia. In that case, Georgia will consider that you earn your income from Georgia and assume that your income is Georgian-sourced personal income: Georgia taxes your Georgian-sourced income at a 20% flat tax rate.
Dividends received from a non-resident company or pensions received from abroad; there are no Georgia Taxes on these incomes.
Taxes In Georgia Country: Only 6 Taxes At Flat Rates
Georgia has a flat rate tax system. It means that tax rates don’t depend on the amount of income a taxpayer receives, but the same rate applies to all taxpayers falling under the subject of a tax in Georgia Country.
0% or 15% Corporate Income Tax
Corporate Income Tax in Georgia Country is levied at a flat rate of 15% and applies only to distributed profits. No tax is due if profits are retained or re-invested (0%).
5% Tax on Interest, Royalties, and Dividends
Dividend Tax in Georgia Country is levied at a flat rate of 5% and applies to Distributed Dividends. And 0% tax rate if these dividends are reinvested in the Georgian economy.
20% Personal Income Tax
If you received a Georgian-source salary, Georgia taxes this personal income at a 20% withholding tax + 4% Pension contribution – 2% paid by the Employer, 2% paid by the employee – (if the employee is a resident of Georgia).
Import Tax 0%, 5%, and 12%
Depending on the imported goods category, an excise tax is levied on specified goods produced in Georgia or imported into Georgia. For example, the excise tax applies to the following goods: Alcoholic drinks, Condensed natural gas, Oil distillates, Goods produced from crude oil, Tobacco products, and Cars.
The Property Tax rate is 1%
Value-Added Tax In Georgia Country (VAT) 18%
The standard VAT rate is 18% and applies to the sale of all goods and services supplied in Georgia carried out as an economic activity. Whether a company or an individual, VAT is due. A company can claim back Value Added Tax in Georgia once the company is registered as a VAT Taxpayer at the Revenue Service.
Tax in Georgia Country: The tax Incentives
Georgia is one of the world’s low tax countries and offers an incredibly welcoming and business-friendly environment. Georgia provides highly beneficial tax incentives for individuals, investors, and companies operating in the country. Together with its dynamic and liberal economy, these factors make Georgia attractive, full of opportunities for those who choose to invest, start a business, or live there.
Special Business Statuses, such as Individual Entrepreneur, the Virtual Zone Person, the Free Industrial Zone company, and the International Company, allow optimizing taxes in Georgia Country between 0% and 5%.
Individual Entrepreneur: Georgia Taxes Only 1% Of Your Income
Freelancers, welcome to Georgia! Foreigners, residents, and non-residents benefit from special statutes granting them many advantages. If you want to run a business that you are the sole owner of, the Individual Entrepreneur Status offers incredible tax advantages.
With this status, if your gross annual turnover does not exceed 500,000 GEL ($165000), Georgia taxes your income at a rate of only 1%! The monthly turnover declaration is mandatory, and there are no professional fees to declare.
Read More about this incredible Individual Entrepreneur Status
Virtual Zone Company: Georgia Country Taxes 0% CIT and 5% Dividends
Also known as the “Information Technology Zone”, this special status allows a Georgian Limited Liability Company, whose activity is related to IT, to benefit from the following tax exemptions. The only requirement is that the IT company provide its services and products to its clients outside Georgia’sGeorgia’s territory.
If your activity fits the VZ status, Georgia Country taxes 5% tax on dividends if the distribution occurs. 0% Corporate Income Tax, 0% VAT, If these Dividends are retained or re-invested, no tax is due.
Read more about the Virtual Zone company In Georgia Country.
Free Industrial Zone Company: The Power of Zero
Georgia is a strategic bridge between the world-leading economies of Europe and Asia. Located on the New Silk Road, Georgia has a free trade agreement with the CIS countries, Europe and China. Georgia has access to a 2.3 trillion consumer market. Georgia Country will become a major distribution hub in ten years.
The Free Industrial Zones offer numerous advantages to entrepreneurs, international company owners, and investors. They are designed to create a tax and customs, legal and administrative environment that highly promotes the competitiveness of tenant companies in world markets. The Tax benefits are numerous : 0% CIT Tax, 0% Dividend Tax, 0% VAT and much more.
Read more about the Free Industrial Zone Taxes In Georgia Country.
International Company Status: 5% Corporate Income Tax
Strategically placed on the New Silk Routes between Asia and Europe, Georgia has further enhanced its attractiveness in 2020.
Georgia has implemented a new International Company Status that brings new and exciting tax incentives for companies in the IT, Logistics, and Shipping sectors.
For these companies, a 5% Corporate Income Tax will apply. Wage Tax is reduced to 5% instead of 20%. Also, the tax on dividend distributions is set at 0% instead of 5%.
Read more about International Status Company Taxes in Georgia.
Tax in Georgia Country: Real Estate Taxation
Georgia Taxes real estate incomes, whether the owner is a resident or non-resident of Georgia.
5% Tax on Rental Income
If a resident or non-resident individual rents out their residential property, Georgia Country taxes this income at a 5% tax rate on such rental income.
0% Tax On Real Estate Capital Gain After 2 Years
Georgia Country taxes the capital gains of real estate resale at a rate of 5%, or 0%, if this asset is maintained for more than two years.
Taxes in Georgia Country: Individual Taxation
Taxes in Georgia country are one of the most advantageous taxes in the world for both individuals and legal entities. Individuals living and working in (or from) Georgia benefit from very nice taxes as an individual.
Georgia Taxes On Personal Income
Georgia does not include tax resident individuals on their foreign-source income.
Personal Income Tax Rates
Georgia Country taxes Personal Georgian-source Income at a flat rate of 20%.
Special Tax Regimes
Individuals with an annual turnover of less than 30,000 Georgian GEL (Georgian Lari)
And who are registered as a micro business, these individuals are tax-exempt on their business income.
Individual entrepreneurs with an annual turnover of less than 500,000 GEL
They may register as a small business and pay 1% tax on their turnover. The rate increases to 3% if annual turnover exceeds 500,000 GEL. If the 500 000 GEL limit is exceeded after two consecutive years, then you shall think about structuring your business through a Limited Liability Company.
Individual – Residence
An individual is recognized as a tax resident of Georgia Country if this one spends more than 183 days or more in any continuous 12-month period ending in the current tax year.
Social security and Pension Contributions taxes in Georgia Country
There are no social security contributions in Georgia
Pension Contributions Taxes In Georgia Country
- A pension contribution is mandatory for all employees resident in Georgia, except for 60+ years for men and 55+ years for women. This pension contribution tax in Georgia Country is financed by Employer, employees, and the government:
- The Employer pays a 2% withholding tax of the employee’s salary income to a private pension institution in force in Georgia.
- Each employee will pay 2% of the employee’s salary to a private pension.
- Each self-employed individual will transfer 4% of their annual income to their pension account.
The government will transfer 2% of the annual salary income of the employee to one’s private pension account when the employee’s annual salary or the income of a self-employed individual is less than GEL 24,000. And 1% when the annual employee salary/self-employed income is between GEL 24,000 and GEL 60,000. If the employee’s annual salary/self-employed individual income is more than GEL 60,000, the government will contribute a 1% pension contribution.
Property Tax In Georgia
Resident individuals whose annual family income exceeds GEL 40,000 in a calendar year are liable for 1% immovable property tax.
Capital Gains Tax In Georgia Country
The profit from selling an apartment or a house with an attached land plot is subject to tax at a 5% rate.
Rental Income Tax In Georgia
A 5% tax applies to the rental income derived by an individual as a result of renting out residential space to an organization, legal entity, or an individual for residential purposes if the individual does not make deductions from this income.
Double Tax Treaties Avoidance
See here a list of countries with which Georgia has a double tax treaty (DTT).
For more detailed information about Individual Taxation, please see our page Individual Taxation In Georgia.
Corporate Income Tax
Headline CIT rate 15%
This Corporate Income Tax page is developed separately. Please visit this page for more information about the Corporate Income Tax in Georgia Country and its applications.