Accounting and tax
- The Georgian Tax Law imposes i) personal income tax, ii) corporate income tax, iii) Value Added Tax (VAT), iv) import tax, v) excise tax and vi) property tax;
- There is no payroll, social security, capital gains, inheritance, wealth, property transfer, social, branch remittance, or any other taxes;
- Resident companies are subject to Georgian i) Corporate income tax of 15% ii) VAT of 18% iii) Import taxes between 0% to 12%; and iv) property tax of up to 1%;
- Foreign companies are subject to Georgian taxation on the income derived from Georgian sources of income and withholding taxes (WHTs);
- However, to avoid double taxation, Georgia has signed tax treaties with 56 countries.
- Resident companies are exempt from the withholding taxes;
- A 5% withholding tax is applicable on dividends paid to non-resident companies, reducible when a double tax treaty is signed;
- Payments of interest and royalties on Georgian source income to non-residents are subject to a 5% withholding tax;
- However, a rate of 15% applies to companies residing in offshore jurisdictions such as the British Virgin Islands, Cayman Islands, Hong Kong, among others.
Import Duty Tax
- Import of goods such as i) produced in a Free Industrial Zone, ii) child and diabetic food products, iii) aviation fuel, lubricants, and other supplementary products to be provided on board for international flights and international sea passages are subject to 0% import tax;
- Certain food products are subject to 5% import tax;
- Food such as i) meat, ii) dairy products, iii) fruits and vegetables, iv) tabaco and v) alcohol, vi) concrete and wooden material, vii) cloth and shoes are subject to 12% import tax.
Value Added Tax
- The standard VAT rate is 18%;
- Companies with an annual turnover exceeding GEL 100,000 (US$35,000) must register for VAT;
- Filing and payment of the VAT must be made by the 15th day of the month following the reporting calendar month.
Personal Income Tax
- Personal income such as i) income from employment, including benefits, ii) individual entrepreneurs’ activities, and iii) other activities are subject to a 20% flat rate in Georgia;
- Georgian residents are taxed in their worldwide income;
- Annual personal income tax returns must be submitted by 31 March each year;
- Ordinarily, Georgian companies can carry forward business losses for a period of 5 years but can be extended to 10 years through an application to the tax authorities. Carryback of losses is prohibited;
- However, the carry forward losses are not permitted for International financial companies, free industrial zone (FIZ) enterprises, and Special Trading Companies;
- All companies must register for tax with the Revenue Service of the Ministry of Finance and file annual tax returns by 1st of April of the year following the end of the fiscal year. The authorities allow a deadline extension to a maximum of 3 months;
- Georgia has so far concluded 56 double tax treaties with different countries including India, Germany, China, United Kingdom, Singapore, Ireland among others.
Legal and compliance
- Foreign nationals are eligible to register companies in Georgia;
- A company must have a registered office in Georgia;
- Clients and suppliers from foreign countries can verify the legal standing of a Georgian company by visiting the National Agency of Public Registry and submitting the request. Publicly available information includes i) business name, registered address and legal status; ii) names and details of the company officers and iii) latest filed annual returns;
- Limited liability companies and joint-stock companies do not require minimum issued share capital before business registration;
- Annual financial statements for both private and public companies must be filed in accordance with the IFRS.
- The Georgian Labor law is flexible and allows the employer to customize the employment policy with the company’s requirements;
- Additionally, the Labor law gives the employer and the employee the freedom to set out and agree on the terms and conditions of the labor contract;
- In Georgia, the probation period may not exceed 6 months. During the probation period, the employer can conclude a labor contract with the applicant or terminate the labor contract concluded for a probation period;
- Georgia does not have minimum wage regulations, and compensation for labour depends on the written agreement with the employer;
- There are no social security/social insurance taxes in Georgia;
- The maximum duration of working should not exceed 40 hours or 48 hours for specific sectors. However, the employer must take into consideration that the duration of the rest time between working days may not be less than 12 hours;
- All employees working in Georgia are entitled to:
- At least 24 days of paid holidays per annum;
- 15 days of national holidays (Religious, National celebrations and the New Year days);
- Additionally, an employee has the right for unpaid leave for at least 15 calendar days per annum;
- Maternity leave for the reason of pregnancy, childbirth, and childcare in the range of 477 calendar days and 126 calendar days are payable from the leave taken for the reason of pregnancy, childbirth and childcare, in case of complicated childbirth or delivery of twins – 140 calendar days;
- According to the Labour Code, if the employer terminates the contract, the company must send written notice to employee at least 1 month prior to the termination and pay at least 1 month salary. Additionally, employer is entitled to give a 3-day prior written notice to the employee, but in this given, situation employer must pay at least two months’ salary/compensation within 30 calendar days of the contract termination.
Other business regulations
- Since 1991, Georgia is a member of the World Intellectual Property Organization, which allow foreign businesses to apply for a patent or a trademark and give them the same intellectual property protection conferred to Georgia nationals.