How does taxation work in Georgia?

Georgia stands out for its attractive tax regime, ideal for international entrepreneurs and investors seeking to optimize their tax strategy. This article aims to explore the Georgian tax structure, analyzing the different taxes, the rates in force and the advantages offered for starting a business. We will discuss the specificities of the corporate tax system, income and VAT taxation, but also double taxation treaties and incentives for foreign investors. A thorough understanding of these elements is essential for any business considering establishing or expanding operations in Georgia.

General overview of taxation in Georgia

In recent years, Georgia has become an attractive economic hub, notably thanks to its tax policy advantageous. This general overview of Georgian taxation is intended to provide an informative framework for businesses and investors considering economic expansion in this country strategically located at the junction of Europe and Asia.

Competitive tax rates

When talking about taxes in Georgia, it is important to note that the tax rates there are particularly competitive. Corporate taxation, for example, is characterized by a fixed rate which is one of the lowest in Europe. Here is a list of the main rates:

• Corporate income tax: 15%
• Personal income tax: 20%
• Value added tax (VAT): 18%
• Customs duties: generally low or zero for preferred trading partners

Dividend Tax Regime

Concerning the treatment of dividends, Georgian tax law is particularly interesting. Dividends and interest are subject to a tax rate of only 5%, thus promoting reinvestment and business growth.

Incentives and Free Zones

Georgia also offers various tax incentives, particularly in its free trade zones. In these zones, businesses can benefit from VAT and customs duty exemptions, as well as profit tax exemptions, for substantial tax relief. This framework encourages the establishment of new businesses and the development of key industrial sectors.

Declaration and Payment Terms

In terms of compliance, the procedures for declaring and paying taxes are simplified. Georgia advocates an approach focused on administrative efficiency and has put in place electronic systems to facilitate tax procedures for businesses.

Double Taxation Agreement

The State of Georgia has signed double taxation agreements with many countries, aiming to promote international trade by preventing company profits from being taxed several times. This measure is a significant advantage for multinationals and international investors.

Sectoral Implementation and Taxation

In the context of establishing a business in Georgia, it is crucial to examine sectoral taxation. Priority sectors can benefit from preferential tax conditions, encouraging investment in certain areas:

• Tech and innovation: tax support for start-ups and technology companies
• Agriculture: tax exemptions on agricultural equipment and inputs
• Tourism and hospitality: incentives for renovation and infrastructure development

Commitment to Tax Transparency

Georgia is firmly committed to tax transparency international. It adheres to OECD standards and participates in the automatic exchange of information, strengthening investors’ confidence in the legality and legitimacy of their tax operations in the country.

In conclusion, taxation in Georgia represents a considerable opportunity for international entrepreneurs. The attractiveness of the system is notable, in particular through its low tax rates, its targeted incentives, and its simplified regulatory framework. However, it is advisable to contact local tax experts for a thorough understanding and optimal application of Georgia tax laws.