Georgia: Business Environment

Accounting Rules

Tax Year: The fiscal year is the calendar year.
Accounting Standards: IFRS, as promulgated by IASB (International Accounting Standards Board), has been translated and fully adopted and made mandatory as the only reporting standards in Georgia for a majority of enterprises (excluding sole entrepreneurs, small businesses and non-commercial legal entities).
Sole entrepreneurs, small businesses and non-commercial legal entities perform accounting and financial reporting following the simplified interim standards, approved by the parliamentary Accounting Commission.
Accounting Regulation Bodies: Ministry of Finance
Accounting Reports: A balance sheet, a profit and loss account, the notes.
Instead of the balance sheet and the statement of profit and losses, small enterprises may draw up an inventory list and profit-and-loss account in compliance with the tax legislation.
Publication Requirements: An enterprise shall publish information and facts, in particular the data of the Entrepreneur’s Register, the information concerning the voting shares and the partners' meetings.
Professional Accountancy Bodies: Association of Chartered Accountants and Auditors (in Georgian)
Certification and Auditing: Companies have to seek a statutory auditor to conduct an annual audit of the financial health of their organization. You can contact an external auditor: Deloitte, Ernst & Young, PricewaterhouseCoopers.
Further information on the website of the Association of Chartered Accountants and Auditors (in Georgian).
Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: Value Added Tax (VAT) - Damatebuli Ghirebulebis Gadasakhadi (Local Name)
Tax Rate: 18%
Reduced Tax Rate: Exempt items include: certain medicines; passenger cars; publications and mass media; baby products; land plots; supply of goods and services between Free Industrial Zone Companies; conduct of financial operations or supply of financial services; medical services; educational services; assets under finance leases if the assets are exempt without the entitlement to credit; betting and gaming services; import of gold for supply to the National Bank of Georgia; supply or import of goods and services needed for the oil and gas industry under the Law of Georgia “on Oil and Gas”; import of natural gas for electricity production; import or temporary import of goods intended for the personal use of the citizens of foreign; countries employed at oil and gas exploration and extraction works; import of natural gas for electricity production; import of goods by an issuer or a recipient of the grant as defined by the grant agreement; etc.

Zero-rated items include: supply of fuel or groceries to the aircraft; supply, remake, repair, servicing or lease of aircraft and equipment installed or used on an aircraft; supply of goods outside Georgia (export, re-export); supply of goods or services intended for the official use of foreign diplomatic missions and equivalent representative offices as well as for the personal use of the members of such diplomatic missions and representative offices (including family members residing with them); transportation of goods under export, re-export, external processing and transit arrangements (foreign goods moving through the customs territory of Georgia) and related services; transportation of goods not yet declared into import, warehouse, temporary import, internal processing or free-zone operations between points located in Georgia and related services (except for storage services); transportation of goods declared into import, warehouse, temporary import, internal processing or free-zone operations before entering the territory of Gergia from the customs border of Georgia to the destination point and related services (except for storage services); transportation of goods declared into import, warehouse, temporary import, internal processing or free-zone operations before entering the territory of Georgia from the customs border of Georgia to the destination point and related services (except for storage services); transportation of passengers and cargo and related services, if the departure or arrival point is located outside Georgia and if a unified transportation document is issued for such transportation; import and supply of products to be provided on board for international flights or international sea passages; transportation, loading, unloading and storage services provided for the purpose of sending (returning) empty transport facilities (including containers and wagons) outside Georgia; supply of natural gas to thermoelectric power stations; supply of Georgian goods to a duty-free outlet for sale, and sale of goods and provision f catering services in a duty-free zone; supply of gold to the National Bank of Georgia; organized foreign tours into Georgia by tour operators and the supply of tourist packages to foreign tourists; rendering of services to ships on carrying goods into the customs territory of Georgia; supply of goods or services or import of goods that qualify for VAT exemption in accordance with the framework of international agreements ratified by the parliament of Georgia; supply of unprocessed agricultural products produced in Georgia (except for eggs and chicken); supply/import of books and e-books, also, rendering of sales and printing services for the goods.
Other Consumption Taxes: Excise duties are applied on alcoholic drinks, condensed natural gas, oil distillates, goods produced from crude oil, tobacco products and automobiles. Telecommunication services and international phone calls are subject to excise taxes (GEL 0.15 per minute on the mobile network; GEL 0.08 per minute on the fixed network).

Corporate Taxes

Company Tax: 15%
retained profits are no longer taxable until they are distributed
Tax Rate For Foreign Companies: Resident companies are taxed on their worldwide income, whereas non-residents are taxed only on their Georgia-source income.
Non-resident companies are subject to tax at the same rate as resident companies.
Foreign companies without a permanent establishment earning income from Georgian sources are subject to withholding taxes (5% for dividends, interest and royalties; 10% for international transportation/communication and services rendered in Georgia; 4% for oil and gas subcontractor income; 0% for insurance and re-insurance).
Capital Gains Taxation: Capital gains are taxable as normal business income at the general corporate income tax rate.
Main Allowable Deductions and Tax Credits: The new corporate tax law incorporates the IFRS accounting principles and does not provide for any deduction as it only taxes distributed profits (retained profits are no longer taxable until they are distributed).
However, the deductions listed below still apply to the taxpayers who continue operating under the old CIT system:
- interest (capped at 24% - no limits are established on loans received from domestic licensed banks and microfinance organisations);
- reserves of insurance funds;
- scientific research;
- depreciation of fixed assets (5-20%);
- repairs (up to 5% of the book value of the relevant asset at the end of the year);
- bad debts (conditions apply);
- insurance costs;
- prospection and extraction of resources;
- depreciation of intangible assets (in proportion with the period of beneficial use, assets valued less GEL 1,000 are fully deductible);
- bad debts (under conditions);
- charitable contributions (up to 10% of the taxable profit).

Start-up expenses incurred before the registration of the company as a taxpayer are not deductible.
Net operating losses can be carried forward for up to five years (taxpayers can request an extension of up to 10 years). The carryback of losses is not permitted.
Other Corporate Taxes: Property tax is levied at maximum of 1% on the annual average residual value of fixed assets (except for land). The average residual value is multiplied by a coefficient of between 1.5 and 3 for properties acquired before 2005. Land used for agricultural purposes is taxed per hectare at rates varying from GEL 5 to GEL 100. An additional coefficient of up to 150% applies depending on the location. Non-agricultural land is taxed at GEL 0.24 per square metre, with a territorial coefficient of up to 150%.
Georgia does not levy transfer taxes or stamp duties. There are no social security contributions payable by the employer. However, payments to a defined contribution pension scheme are mandatory, with the employer contributing 2% of the employee’s gross salary. The state contributes 2% on an employee’s gross annual salary of up to GEL 24,000 and 1% on the excess up to GEL 60,000; however, no contribution is made where the annual salary exceeds GEL 60,000.
A self-employed person makes a 4% contribution.
Other Domestic Resources: Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Georgia	Eastern Europe & Central Asia	United States	Germany
Number of Payments of Taxes per Year	5.0	13.9	10.6	9.0
Time Taken For Administrative Formalities (Hours)	216.0	226.2	175.0	218.0
Total Share of Taxes (% of Profit)	9.9	36.5	36.6	48.8

Source: Doing Business - Latest available data.

Individual Taxes

Tax Rate

Income Tax	20% flat rate
Individuals with annual turnover below GEL 30,000, without employees, and registered as a micro business	exempt from tax on their business income
Individual entrepreneurs registered as small business	1% on turnover if it is below GEL 500,000 3% on turnover if it is above GEL 500,000
Income from renting out residential space to an individual solely for residential purposes	5%

Allowable Deductions and Tax Credits: Expenses related to business activities are deductible for individual entrepreneurs. There are no personal deductions or allowances for employees.
Special Expatriate Tax Regime: Resident and non-resident individuals are taxable only on Georgia-source income at the same rates.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of the conventions signed
Withholding Taxes: Dividends: 0 (paid to resident companies)/5%; Interest: 0 (paid to resident companies)/5% (non-residents)/15% (if paid to a non-resident registered in a low-tax jurisdiction); Royalties: 0 (paid to resident companies)/20% (resident individual)/5% (non-residents)/15% (if paid to a non-resident registered in a low-tax jurisdiction)

Sources of Fiscal Information

Tax Authorities: Overview of Georgia's tax measures in response to Covid-19
Revenue Service of the Ministry of Finance
Other Domestic Resources: Types and rates of taxes - Revenue Service
Invest in Georgia - Tax Information

Intellectual Property

National Organisations: The authority in charge of the protection of intellectual property in Georgia is the Sakpatenti (National Center for Intellectual Property).
Regional Organisations: Georgia is a signatory to the WIPO Treaty on copyright, and the Paris Convention on the Protection of Industrial Property.
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Law on Patents.	8 to 20 years after the registration of a patent.	Patent Cooperation Treaty (PCT)
Trademark Law on trademarks.	10 years after the registration of the trademark.	Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design Legislation on copyright and assimilated rights.	70 years after the death of the author.
Copyright Legislation on copyright and assimilated rights.	70 years after the death of the author.	Berne convention For the Protection of Literary and Artistic Works WIPO Copyright Treaty
Industrial Models Law on Patents.	8 to 20 years after the registration of a patent.

Legal Framework

Independence of Justice: The judiciary is not fully independent, with courts influenced by pressure from the country's executive branch.
Equal Treatment of Nationals and Foreigners: Foreign nationals cannot expect a fair trial from the country's judicial system.
The Language of Justice: Georgian is the judicial language in the country; with Abkhaz being the judicial language in Abkhazia.
Sources of the Law and Legal Similarities: The main source of the law is the constitution of 1995, which is based on a civil law system. Georgia accepts compulsory ICJ jurisdiction. Georgia is a member of the CIS (Commonwealth of Independent States).
Checking National Laws Online: Georgian legislation

Standards

National Standards Organisations: Georgian National Agency for Standards, Technical Regulations and Metrology, (in Georgian).
Integration in the International Standards Network: The GEOSTM is a public corporation, and is a correspondent member of ISO and a member of the Euro-Asian Council for Standardization, Metrology and Certification (EASC).
Classification of Standards: For further information, consult the Georgian National Agency for Standards, Technical Regulations and Metrology (in Georgian).
Online Consultation of Standards: GEOSTM (in Georgian).
Certification Organisations: GEOSTM Georgian National Agency for Standards, Technical Regulations and Metrology.

Business Practices

General Information: Kwintessential, Advice on how to negotiate in Georgia
Opening Hours and Days: Most companies open from Monday to Friday. Opening hours for shops and financial institutions are from 9 am to 6 pm, with a break at 1 pm.
Most retail outlets are open on Saturday between 9 am and 6 pm.

Public Holidays

New Year's Day	1 January
Orthodox Christmas	7 January
Orthodox Epiphany	19 January
Restoration Day	9 April
Orthodox Good Friday	Variable
Orthodox Easter Monday	Variable
Victory Day	9 May
Saint Andrew's Day	12 May
Independence Day	26 May
Assumption of Our Lady (Mariamoba)	28 August
Svetitskhovloba	14 October
Saint George's Day	23 November

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