Value-added tax (VAT)
From 1 January 2021, new VAT regulations have been enacted in Georgia. These changes are a result of the European Union (EU)-Georgia Association Agreement signed in 2014 and aim to approximate the Georgian VAT system with the EU VAT directive.
The standard VAT rate is 18% and applies to the supply of all goods and services for consideration on the territory of Georgia within the scope of economic activities.
Goods are considered to be supplied in Georgia if they are located on the Georgian territory upon its transfer. If the supply of goods is accompanied by transportation, then the place of supply is considered in Georgia if its shipment originates in Georgia.
Under the general rule, place of supply of services depends on whether it is B2B or B2C supply, as follows:
- In case of B2B supplies, the place where the service recipient or its fixed establishment is located is considered as the place of service delivery.
- In case of B2C supplies, the place where the supplier or its fixed establishment is located is deemed the place of service delivery.
However, in relation to certain types of services, place of B2C supplies is determined based on the location of the recipient. Such services, among others, include telecommunication services, electronically supplied services, advertising, consulting, financial services, insurance services, etc.
Additionally, special place of supply rules apply for services related to immovable and movable property, transportation services, catering, leisure activities, etc.
A person established in Georgia must register as a VAT payer when its taxable turnover exceeds GEL 100,000 in any continuous 12-month period. Georgian fixed establishment of a foreign taxable person is liable for VAT registration from the beginning of taxable operations.
Generally, VAT is chargeable at the moment of supply of goods and services. VAT is also applied on the advances received on goods and services to be supplied.
The taxable amount is determined based on the received/receivable consideration.
VAT-exempt supplies include financial services, goods and services required for oil and gas operations, certain medical and education services, etc.
Reverse-charge VAT applies to services provided to Georgian VAT payers by a non-resident VATable person. Also from April 2021, non-Georgian businesses providing digital services to Georgian consumers are required to register in Georgia and comply with VAT liabilities.
VAT compliance for digital business
Persons that are not established or have no habitual residence in Georgia and/or do not have a fixed establishment in Georgia and provide digital services to the individuals in the territory of Georgia have the obligation to declare and pay VAT in Georgia.
Digital services are considered rendered in Georgia if one from the following conditions is met:
- Georgia is the location of the financial institution in which the account is opened and used to reimburse the services rendered or of the electronic financial operator through which the payment is made.
- Location of the service recipient is Georgia.
- Network address (IP) of the device used by the service recipient to purchase the service is located in Georgia.
- Phone code of the country used to purchase/pay for the service belongs to Georgia.
VAT calculation and payment liabilities arise on provided digital services from 1 October 2021.
Reporting should be made on a quarterly basis by the 20th day of the month following the reporting period (1 January - 31 March, 1 April - 30 June, 1 July - 30 September, 1 October - 31 December), while the payment deadline is the end of the month following the reporting period.
Payment can be executed in United States dollars (USD), euros (EUR), or Georgian lari (GEL).
Import tax is levied on goods that cross the economical borders of Georgia (except export). Depending on the types of products, general rates on imported goods are: 0%, 5%, and 12%. Imported cars are taxed at GEL 0.05 multiplied by the volume of the engine, plus 5% of import tax on each additional year of ownership.
Excise tax is levied on specified goods that are produced in Georgia or imported into Georgia. Excise tax generally is calculated with reference to the quantity of goods (e.g. volume, weight) or, in the case of automobiles, on the basis of the engine capacity and vehicle age. Excise tax rate varies from GEL 0.08 to GEL 800 for one unit.
Excise tax applies to the following goods:
- Alcoholic drinks.
- Condensed natural gas, except for pipeline.
- Oil distillates.
- Goods produced from crude oil.
- Tobacco products.
The export of excisable goods is exempt from excise tax with the right to credit.
Apart from goods, termination service of international calls in mobile and fixed networks are also subject to excise tax in Georgia.
International calls termination is taxable based on the call duration with the following rates:
- Call termination within mobile network: GEL 0.15 per minute.
- Call termination within fixed network: GEL 0.08 per minute.
Property tax is payable at the rate of 1% on the annual average residual value of fixed assets (except for land) and investment property on the balance sheet as well as on leased out property of Georgian entities or foreign entities with taxable property in Georgia. For immovable property acquired before 2005, the average residual value must be multiplied by a coefficient of between 1.5 and 3, depending on the acquisition date.
The annual land tax rate for agricultural land varies according to the administrative unit and the land quality.
The base tax rate per 1 hectare of agricultural land varies from GEL 5 to GEL 100. The tax is further adjusted by a territorial coefficient of up to 150%, depending on the location.
The base tax rate payable on non-agricultural land is GEL 0.24 per square metre, which is further adjusted by a territorial coefficient not exceeding 150%.
There are no transfer taxes in Georgia.
There are no stamp taxes in Georgia.
Payroll tax in Georgia represents a normal personal income tax (PIT), which is withheld by an employer at the source of payment of salary to an employee at a 20% rate of gross payment.
Social security contributions
See Pension contributions in the Other taxes section in the Individual tax summary.