Taxes in Georgia: Tax payers, rate and period of payment 2023

The text is compiled as of September 1, 2023, of the Tax Code and does not take into account the following changes.

The text is presented for those who intend to plan their taxes. It is not recommended to be used for tax declaration. Because the text contains the main parts of the Tax Code of Georgia and not the full content.

Common-state taxes include:

  1. a) income tax;
  2. b) profit tax;
  3. c) value added tax (VAT);
  4. d) excise duty; We will not discuss
  5. e) Import tax. We will not discuss

Local tax:

Property tax.

The payer of income tax is: (Article 79.)

  1. a) resident natural person;
  2. b) a non-resident natural person who receives income from a source in Georgia.

 

The following are taxed with income tax:

The subject of income tax of a resident natural person is the taxable income, which is defined as the difference between the total income received during the calendar year and the amounts of deductions stipulated by this Code for this period. (Article 80. Paragraph 1.)

The tax rate is 20%.

 

Non-resident natural person.

A non-resident natural person if doing business through a permanent establishment. The subject of personal income tax is taxable income, which is defined as the difference between the total income received from a source in Georgia related to a permanent establishment during a calendar year and the amount of deductions provided for in this Code for that period. (Article 80. Paragraph 2.)

The tax rate is 20%.

The combined income of a non-resident natural person, which is not related to his permanent establishment in Georgia, is taxed without deduction at the source of payment according to the following types: (Article 80. Paragraph 3.)

  1. Dividend 5%. Profit tax is paid first, then dividend tax. The dividend to be distributed is 100 GEL. First, profit tax of 100*15% = 15 GEL will be paid. 85 (100-15)*5% = 4.25. Cash on hand 80.75 (100-15-4.25=80.75)
  2. interest (loan interest) 5%. 100 to 5 GEL per hand, 95 GEL.
  3. royalty 20%

A non-resident natural person who receives income from the sale of property is liable to income tax on the total income received from sources in Georgia during the calendar year, which is reduced by the amount of deductions related to the receipt of such income for that period. (Article 80. Paragraph 4.)

Surplus received from the sale of ordinary shares or partner’s share; 20% fee for the right to use minerals in the process of extracting minerals and processing man-made formations;

Income received for the use of a copyright, software, patent, drawing, model, trademark or other intellectual property or for the transfer of the right of use to another person;

Income received for the use of industrial, commercial or scientific-research equipment or for the transfer of the right of use to another person; income received for the use of know-how; Income received for the use of a motion picture, video film, sound recording or other means of recording or for the transfer of the right of use to another person; etc …….

Income received from the lease of movable property used in Georgia and/or the transfer of other contractual rights of use;

Income received from real estate existing in Georgia and used for economic activities, including income received from the sale of a partner’s share in such property;

The entrepreneur pays 20% of the difference between income and expenses. The declaration is valid until March 30 of the following year, and payment is made until then.

When paying the salary, the employer pays 20%, including the 15th of the following month.

5% of additional income received by a natural person from the delivery of a residential apartment (house) and the land attached to it, as well as a motor vehicle (Article 81).

 

Taxpayers, taxable base, rate and payment period.

Income tax

The payer of profit tax is:

  1. a) resident enterprise;
  2. b) A non-resident enterprise that carries out its activities in Georgia through a permanent establishment and/or receives income from a source in Georgia. (Article 96).

 

Payment of profit tax is carried out:

A resident enterprise and a non-resident enterprise shall pay profit tax when carrying out the following operations: (Article 97).

  1. Distributed (dividend) profit.
  2. an incurred expense or other payment that is not related to economic activity;
  3. free delivery of goods/services and/or transfer of funds;
  4. Representation expenses incurred in an amount greater than the threshold amount established by this Code.

The profit tax rate is 15%.

The profit declaration is issued every month, including the 15th of the following month.

Payment of profit is mandatory by the 15th of the following month.

Value added tax (VAT);

  1. Transactions subject to VAT are: (Article 159.)
  2. a) supply of goods by a taxable person within the framework of economic activity in the territory of Georgia in exchange for remuneration;
  3. b) provision of services for remuneration by a taxable person within the framework of economic activity in the territory of Georgia;
  4. c) Import of goods.

 

  1. Supply of goods/providing of services, which is directly related to the supply of other types of goods/providing of services or is auxiliary to the supply of other types of goods/providing of services, is considered part of the provision of this service/supply of goods. (Article 159).

 

Reverse charge

The following are taxed with VAT according to the reverse charge method:

Provision of services to a tax agent in the territory of Georgia by a taxable person who is not established or does not normally reside in Georgia, or does not have a fixed establishment in Georgia that participates in the provision of these services;

and other operations.

The VAT rate is 18 percent. (Article 166.)

The VAT reporting period is a calendar month. (Article 166.)

 

Declaration and payment period

A taxable person registered as a VAT payer is obliged to submit a VAT declaration to the tax authority no later than the 15th day of the month following the reporting period and to pay the tax within the same period. (Article 166.)

 

Inclusion of VAT – see the article “VAT – Value Added Tax” and its part “Inclusion of VAT”

 

Property tax

Payer of property tax and object of taxation (Article 201.)

 

The property tax payer is:

resident enterprise

Non-resident enterprise

Physical person

 

An object of taxation is:

  1. Property – taxable property and land. (Article 200.)
  2. Land – agricultural, non-agricultural and forest lands.
  3. Agricultural land:
  4. a) arable land (including perennial crops);
  5. b) mower;
  6. c) pasture;
  7. d) Homestead.

Resident enterprise organization: (Article 201.)

  1. The property tax payer is:
  2. a) Resident enterprise/organization:

A.a) on assets recorded as fixed assets and/or investment property on its balance sheet, uninstalled equipment, unfinished construction, as well as property leased by it;

A.b) on real estate, yacht (boat), helicopter, airplane and other means of transport received (owned) within the framework of measures to ensure the performance of contractual obligations;

a.c) within the framework of payments of monetary obligations (except for criminal and administrative sanctions) on real estate, yacht (boat), helicopter, airplane and other means of transport purchased by auction, direct sale or in another manner;

  1. b) Non-resident enterprise – on the property in the territory of Georgia, defined by the first part of this article (including on the property in the territory of Georgia issued on the basis of a lease, rent, usufruct or other such type of contract);
  2. c) natural person:

G.a) on real estate owned by him (including unfinished construction, buildings or their parts), yachts (boats), helicopters, airplanes and light vehicles defined by code 8703 of the national commodity nomenclature of foreign economic activity;

g.b) on the property received by leasing from a non-resident;

g.c) in case of carrying out economic activity, on the assets recorded as a fixed asset on its balance sheet, on non-installed equipment, as well as on the property leased by it.

  1. For the purposes of the first part of this article, a person is a property tax payer for the object of property tax taxation registered in the name of the deceased person in possession and/or use, except for the case when the property is used on the basis of a lease, rent, usufruct or other such type of agreement.

Rate of tax on property (Article 202).

 

  1. The annual rate of property tax for an enterprise/organization is determined in the amount of no more than 1 percent of the value of the taxable property. For the purposes of this section, the taxable property value is the average annual residual book value (calculated from the average value of the assets at the beginning and end of the calendar year).
  2. The annual tax on the taxable property leased to the leasing company during the entire leasing period is determined by it in the amount of no more than 0.6 percent of the initial book value at the time of the first lease of the taxable property.

The annual rate of tax on the taxable property of an individual is differentiated according to the income received by the taxpayer’s family during the tax year and is determined by the following amount:

  1. a) for families with income up to 100,000 GEL – not less than 0.05 percent and not more than 0.2 percent of the market value of the taxable property at the end of the tax period;
  2. b) for families with an income of 100,000 GEL or more – not less than 0.8 percent and not more than 1 percent of the market value of the taxable property at the end of the tax period.

 

Payer of property tax on land and object of taxation (Article 203.)

The person paying the property tax on land as of April 1 of the tax year is:

  1. a) on the land owned by him;
  2. b) on state-owned land, which he uses or owns;
  3. c) on a plot of land registered in the name of a deceased person in his possession and/or use, except for the case when the plot of land is used on the basis of a lease, rent, usufruct or other such type of agreement.

 

Calculation and payment of property tax (Article 205.)

  1. The property tax period is considered to be a calendar year.
  2. The enterprise/organization submits the property tax declaration to the relevant tax authority no later than April 1 of the calendar year and pays the property tax within the same period, except for the case provided for in Section 7 of this Article. In the declaration, data on taxable property is entered according to the last tax year, and on taxable land – according to the current tax year.
  3. The enterprise/organization pays tax on the property in the form of a current payment, in the amount of the annual tax of the last tax year, no later than June 15 of the tax year.
  4. The enterprise/organization pays property tax on land no later than November 15 of the calendar year.

 

  1. An individual pays property tax on property and land no later than November 15 of the calendar year.

 

Article 206. Exemption from tax

  1. According to the relevant taxation object, the following are exempted from property tax:
  2. a) taxable property of a natural person (except land), if the income received by the family of this person during the previous year of the current calendar year does not exceed 40,000 GEL;

etc….

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