There are only six taxes in Georgia, of which five (Personal Income Tax, Corporate Income Tax, Value Added Tax, Excise Tax and Import Tax) are nationwide, and one (Property Tax) is a local tax. There are no capital gains, inheritance, wealth, property transfer, social, branch remittance, or other taxes imposed in Georgia.
Personal income tax (PIT) is a tax levied on the income of individuals. Individuals who are tax residents in Georgia pay PIT on their worldwide income, whereas tax non-residents pay PIT only on their Georgian source income, subject to double taxation treaty relief. Notably, although foreign source income of tax residents is subject to PIT taxation, it is specifically exempted from taxation as outlined below. Thus, effectively both tax residents and non-residents of Georgia pay PIT on their Georgian source income. In this regard it is crucial for individuals to define income generated from the source in Georgia. Although the rules to define place of income are complicated, a general principle is that if activities of an individual to generate income are carried out in Georgia, that respective income will be sourced therein.
Income taxpayer is:
- Resident natural person;
- Non-resident natural person.
Individuals are considered tax residents in Georgia for the whole tax year if they are actually present in Georgia for 183 or more cumulative days in any period of 12 consecutive calendar months ending in the subject tax year, or are in the Georgian State Service abroad during the subject tax year.
For Georgian personal income tax purposes, total income comprises any income received in any form and/or from any activity, that is divided into the following categories:
- Income from employment
- Income from economic activities
- Other income not related to employment and economic activities.
Income from employment includes all remuneration received from employment, including cash and benefits in kind. Benefits in kind are included in employment income at their market price reduced by any payments made by employee to employer for those benefits. Taxable benefits may include Life and/or health insurance plans paid by the employer, Private use of an employer owned car, Gift from the employer etc.
Income Tax rates
A natural person’s (regardless of his/her residence) taxable income shall be taxed at the rate of 20%, unless otherwise provided for by the Tax Code of Georgia.
Incomes subjecting to taxation at the source of payment are taxed:
- Salary – 20%
- Dividends – 5%
- Rates – 5%
- Royalties – 20%
- As a result of renting out the residential space to an organization, legal or a natural person for residential purposes – 5%
- Surplus income gained by a natural person from the provision of a residential apartment (house) and of the land attached to it, or from the provision of a vehicle – 5%