Foreign tax credit
Income tax or profit tax paid on income earned from outside Georgia may be credited against CIT payable in Georgia. The amount of credited taxes may not exceed the Georgian tax payable on the foreign income. The rule is also applicable under the new CIT system on CIT due from dividend distribution.
The following are exempt from CIT (the list is not exhaustive):
- Expenses incurred by the budgetary, international, and charitable organisations related to the objectives of their organisational activities.
- Distribution of profit earned by a FIZ enterprise from its permitted activities and CIT taxable costs incurred in relation with the same activities conducted in a FIZ.
- Profit (distribution of profit) earned from the supply of information technologies outside Georgia developed by a legal entity of a virtual zone.
- Distribution of profit earned by a special trading company from conducting permitted activities (except for the profit earned by the company from the supply of a fixed asset used by the company for its economic activity for over two years).
Free Industrial Zone (FIZ)
A Free Industrial Zone Company is a registered entity located inside a FIZ that has confirmed its status with the tax authorities.The following rules apply for enterprises located in a FIZ:
- Income received by an FIZ enterprise from its permitted activities conducted in an FIZ is exempt from CIT.
- The importation of foreign goods into an FIZ is free of customs duties and VAT-exempt.
- Operations carried out in an FIZ are VAT-exempt.
- Property located in an FIZ is exempt from property tax.
- Bringing (importing) goods produced within a free industrial zone from the free industrial zone in other territory of Georgia (outside the free industrial zone) is exempt from import tax.
- The PIT of employees is paid by those individuals through self-reporting.
An FIZ enterprise should pay tax at a rate of 4% on the market price of the goods supplied/received to/from a person registered under the Georgian law (excluding on the supplies to/from other FIZ enterprises).
Virtual Zone Persons
A virtual zone person is a legal person engaged in IT activities and holding an appropriate status. The status of the virtual zone is granted by a person designated by the Government of Georgia. The following rules apply for Virtual Zone Persons:
- Profit earned (distribution of profit) from supplying the information technologies created by virtual zone persons outside Georgia is exempt from profit tax.
- Supply of information technologies created by virtual zone persons outside Georgia is exempt from VAT.
Special Trading Company
A Special Trading Company is a company having status granted by the tax authorities. A Special Trading Company may sell and re-export foreign goods and distribution of the profit gained as a result of conducting these activities is exempt from profit tax.
An international company is an enterprise of Georgia, which performs activities defined by an ordinance of the Government of Georgia and earns income solely from these activities. The following rules apply for International Company:
- An international company should not be set up within a Free Industrial Zone.
- Provision of services of International Company to non-residents is not subject to taxation under VAT.
- Distribution of dividends and incurring CIT taxable expenses by international Company is subject to CIT taxation at 5%.
- Dividend distribution by an international company is exempt from WHT.
- International company does not have to act as a tax agent while paying salaries.
- An international company is exempt from property tax (except for land) if that property is intended for use or is used for the activities allowed by the ordinance of the Government of Georgia.
The rules for granting the status of international company and a list of permitted activities is not determined yet .