Taxation in Georgia: A Complete Guide for Companies and Founders
Every tax a Georgian company and its owners realistically meet - corporate income tax on the Estonian model, dividends, VAT and reverse charge, payroll and pension, property, plus the preferential regimes, residency, and the compliance rhythm.
Georgia's tax system is set out in the Tax Code of Georgia. Its defining feature for companies is that corporate income tax is generally charged not on profit as it is earned, but on profit as it is distributed - the model Georgia adopted from Estonia in 2017. Understanding that single point removes most of the confusion founders arrive with.
15%
Corporate income tax
On distributed profit
5%
Dividend withholding
On distributions to individuals
18%
VAT
Registration from 100,000 GEL turnover
General information, not legal or tax advice. Every figure here is set by the Tax Code and changes periodically. Confirm the current rate and the treatment of your specific facts before relying on any number.
Corporate income tax: the Estonian model
Under the Tax Code, resident enterprises are generally taxed at 15% on distributed profit and on payments treated as equivalent to a distribution, rather than on accounting profit. Retained and reinvested profit is generally not taxed until it leaves the company.
The object of taxation for a resident enterprise is distributed profit, expenses or other payments not related to economic activity, free supply of goods or services, and representation expenses exceeding the statutory limit.
- Rate: 15% on the taxable distribution.
- Trigger: distribution of profit, expenses not related to economic activity, free supplies, and certain over-limit representation costs are treated as taxable events.
- Effect: a company that reinvests its profit generally carries no corporate income tax charge in that period.
- Filing: monthly, with the return and payment due in the month following the taxable event.
The trap is not the rate, it is the definition of a distribution. Paying a shareholder's personal expenses from the company, or moving money out without a documented business purpose, is treated as a distribution and taxed as one. Keep the company's money and the owner's money separate.
A consulting LLC that reinvests, then distributes
A two-founder Georgian LLC bills 240,000 GEL in a year to EU clients, spends 140,000 GEL on salaries and operating costs, and ends the year with 100,000 GEL of profit. In year one the founders leave the money in the company. In year two they distribute 60,000 GEL.
- 1Year one: profit is retained. No corporate income tax event arises, because tax is charged on distribution, not on accounting profit.
- 2Year two: the company distributes 60,000 GEL. Corporate income tax at 15% applies to the taxable distribution and is declared in the month following the event.
- 3The individual shareholders then meet the 5% dividend withholding, applied at source on the distribution.
- 4Both founders must also check their own country of residence - the Georgian charge is not the end of the analysis.
Same profit, two different tax years, two different outcomes. The decision that creates the tax is the distribution, not the earning.
Illustrative arithmetic. Confirm current rates and the treatment of your specific distribution before relying on it.
Dividends and the owner's own tax
Dividends paid by a Georgian company to an individual are generally subject to a 5% withholding, applied at source. Because corporate income tax has already been charged at distribution, founders should model the combined effect rather than either figure alone. Where a double tax treaty applies - Georgia has a wide treaty network - the treaty may reduce or reallocate the charge, but the treaty has to be claimed with the right documentation, not assumed.
VAT
- Standard rate: 18%.
- Registration threshold: mandatory registration is triggered where taxable turnover exceeds 100,000 GEL in any continuous 12 months; voluntary registration below the threshold is possible and is sometimes commercially sensible.
- Reverse charge: services bought from a non-resident supplier and used in Georgia commonly fall under the reverse-charge mechanism, which catches almost every company that buys software, advertising or contractor services from abroad.
- Exports of goods and, in defined cases, services supplied outside Georgia are treated as zero-rated or outside scope, but the classification must be documented.
- Filing: monthly.
A taxable person is required to register for VAT where the total amount of taxable transactions carried out during any continuous 12 calendar months exceeds 100,000 GEL.
Payroll, personal income tax and pension
- Personal income tax on employment income is generally 20%, withheld by the employer at source.
- Mandatory funded pension contributions apply to defined categories of employee, with contributions from the employee, the employer and the state.
- The employer files and pays monthly. Engaging someone as a contractor to avoid payroll is a classification question, not a planning technique - the substance of the relationship governs.
Other taxes a company may meet
- Property tax, charged at municipal level on assets held.
- Excise, on defined goods.
- Import duties, depending on origin and the applicable free trade agreements.
- Gambling and other sector-specific taxes for licensed activities.
Preferential regimes
Georgia offers several statuses that materially change the position for qualifying businesses. Each is conditional, and each is granted on evidence rather than intention.
| Regime | Who it is for | Headline effect | What it demands |
|---|---|---|---|
| Virtual Zone Person | IT products and services created in Georgia, sold abroad | Qualifying exported IT profit exempt from corporate income tax | Genuine IT activity in Georgia, evidenced |
| International Company | Qualifying IT and maritime activities | Reduced profit and payroll rates | Real substance, qualified staff, group operating history |
| Small Business (IE) | Individual entrepreneurs within the turnover cap | 1% on turnover | Cap respected, activity not on the excluded list |
| Free Industrial Zone | Goods-based activity inside a zone | Exemptions on defined activity | Zone fees, rent, and mainland sales treated as imports |
| Standard regime | Everyone else | 15% on distributed profit only | Nothing beyond ordinary compliance |
Virtual Zone Person
For companies delivering IT products and services created in Georgia to customers abroad. Qualifying exported IT supply is exempt from corporate income tax on the profit derived from it; distributions can still attract the dividend charge, and local sales fall outside the exemption. The Ministry of Finance grants the status; substance and evidence of genuine IT activity have become central to how it is reviewed.
International Company status
A narrower regime for qualifying activities, notably in IT and maritime services, with reduced rates on profit and payroll for companies that meet real substance requirements including qualified staff in Georgia and demonstrable operating history in the group. The status is granted under the framework set out for international companies, and rests on the applicant showing genuine local operations rather than a paper presence.
Small Business status (Individual Entrepreneur)
For registered Individual Entrepreneurs whose annual turnover stays within the statutory cap and whose activity is not on the excluded list, turnover is taxed at 1%, rising if the cap is exceeded. It is the cheapest structure in Georgia for a solo consultant or freelancer, and the most frequently misapplied - the excluded activity list and the cap both matter.
Free Industrial Zones
Companies operating in a Free Industrial Zone benefit from exemptions on defined activities, subject to zone-specific conditions and transactions with the Georgian mainland being treated separately. The zones operate under the framework for free industrial zones, and, as a rule, sales from the zone into the Georgian mainland are treated as imports rather than as exempt zone activity.
Tax residency: the company and the person
A company incorporated in Georgia is generally a Georgian tax resident, and residency can also follow the place of effective management. For individuals, the ordinary test is presence in Georgia for more than 183 days in any continuous 12-month period, and there is a separate high-net-worth route to Georgian tax residency for qualifying applicants.
Owning a Georgian company does not make you a Georgian tax resident, and it does not release you from tax where you actually live. Model both sides - Georgian and home-country - before you rely on any number.
The compliance rhythm
The expense that became a distribution
A director charges a family holiday and a car to the company, reasoning that the company earned the money and the tax is deferred until distribution.
- 1The Estonian-style model defers tax on profit retained in the business, not on profit taken out of it in another form.
- 2Expenses not related to economic activity are treated as equivalent to a distribution and taxed accordingly, in the period they occur.
- 3The company had filed nil corporate income tax returns for those months, because the founder did not regard the payments as distributions.
- 4On review the charge arises with interest, and the nil returns become inaccurate returns, which is a separate problem from the tax.
Deferral rewards leaving money in the business. Taking value out in a form other than a dividend does not avoid the tax point; it moves it somewhere less convenient and adds a filing error on top.
Illustrative. What constitutes a non-business expense is defined by the Tax Code and applied on the facts.
- Monthly: corporate income tax return where a taxable event occurred, VAT return if registered, payroll withholding and pension.
- Annually: financial statements, prepared and filed according to the company's size category.
- Continuously: keeping the Revenue Service profile, the registered address and the ownership record accurate.