Taxes in Georgia are among the most competitive in the world for foreign entrepreneurs – a flat structure, low rates, and a territorial taxation principle that exempts most foreign-source income entirely. If you’re considering doing business in Georgia, understanding the local tax system is the first step to making the right structural decisions.
This guide covers every tax category you need to know: corporate income tax, VAT, personal income tax, small business regimes, and payroll obligations – written specifically for foreign business owners and expats.
How Georgia’s Tax System Works: The Basics
The Georgian tax system is governed by the Tax Code of Georgia and administered by the Revenue Service (rs.ge). It operates on a territorial taxation principle – meaning Georgian taxes apply only to income generated within Georgia. Income earned outside the country is generally not subject to Georgian tax for residents.
Georgia has 6 core taxes. Corporate Income Tax (CIT) is set at 15% and applies only to distributed profits. Personal Income Tax (PIT) is a flat 20%. VAT stands at 18%. Import Tax varies between 0%, 5%, or 12% depending on the product. Excise Tax varies by product category. Property Tax ranges from 0.1% to 1%.
Corporate Income Tax in Georgia: The Estonian Model
One of the most important features of taxes in Georgia for foreign business owners is the Estonian-model corporate income tax, introduced in 2017.
Retained profits are not taxed – as long as profits stay within the company, no CIT is due. CIT of 15% applies only when profits are distributed as dividends. This applies to both Georgian-resident companies and permanent establishments of foreign companies.
Why this matters for foreign entrepreneurs: A company can accumulate profits, reinvest, and scale without any corporate tax liability. Tax is triggered only at the moment of extraction.
Example: A company generates 300,000 GEL in net profit. If it reinvests the full amount, CIT = 0. If the owner distributes 100,000 GEL as dividends → CIT = 15,000 GEL paid by the company at source.
CIT must be declared and paid by the 15th of the month following distribution.
VAT in Georgia: Rates, Registration, and Obligations
VAT is one of the most operationally important taxes in Georgia for businesses selling goods or services.
The standard rate is 18%. Exports of goods and international transportation services are zero-rated at 0%. Financial services, medical services, and educational services are exempt with no VAT applied.
Registration threshold: A business must register for VAT once its annual turnover exceeds 100,000 GEL (~$37,000 USD). Registration is mandatory within 2 business days of crossing the threshold. Voluntary registration is also possible before this threshold – useful for B2B businesses that want to reclaim input VAT.
VAT returns are filed monthly and paid by the 15th of the following month via the Revenue Service portal.
For foreign companies without a Georgian entity: If a foreign company provides digital services to Georgian consumers (B2C), it may be required to register for VAT in Georgia regardless of the threshold – similar to the EU VAT OSS rules.
Personal Income Tax in Georgia
Personal income tax (PIT) in Georgia applies at a flat rate of 20% on most employment and self-employment income.
Employment and salary income is taxed at 20%. Dividends received by individuals are taxed at 5%. Interest income is taxed at 5%. Royalties are taxed at 20%. Capital gains on real estate sold by individuals are taxed at 5%.
Tax residency: An individual becomes a Georgian tax resident by spending 183 or more days in Georgia within any 12-month period. Residents are taxed only on Georgian-source income – foreign income remains outside Georgian tax jurisdiction under the territorial principle.
A Tax Residency Certificate can be obtained from the Revenue Service and is commonly used by digital nomads, entrepreneurs, and expats to confirm their Georgian tax status to foreign authorities.
Small Business Tax Regimes: 1% and Micro Status
Georgia offers special tax regimes designed to dramatically reduce the tax burden for small operators – and these are among the most attractive features of taxes in Georgia for freelancers, consultants, and solo entrepreneurs.
Micro Business Status applies to annual turnover under 30,000 GEL. Income tax is 1% on gross revenue. The business is exempt from VAT and cannot hire employees. Best suited for solo consultants, freelancers, and early-stage operators.
Small Business Status applies to annual turnover between 30,001 GEL and 500,000 GEL. The flat tax is 1% on gross revenue, or 3% if VAT-registered. Accounting and reporting requirements are significantly simplified. Best suited for service businesses, agencies, and small retail operations.
Both regimes require an application to the Revenue Service and are subject to eligibility rules – certain business activities including financial services and gambling are excluded.
Payroll Taxes and Pension Contributions
If you have employees in Georgia, the employer withholds 20% PIT from gross salary and pays it to the Revenue Service by the 15th of the following month.
Mandatory pension contributions have been in place since 2019. The employee contributes 2% of gross salary, the employer contributes 2%, and the state adds a 2% top-up – for a total of up to 6% directed into the employee’s personal pension fund. This is not a traditional payroll tax; the funds belong entirely to the employee.
Georgia does not have a mandatory social security contribution system beyond pension – no employer health insurance levy or similar payroll tax exists.
Double Tax Treaties: Reducing Withholding Tax
Georgia has signed Double Tax Treaties (DTTs) with 55+ countries, including Germany, France, the Netherlands, the United Kingdom, UAE, and China.
DTTs are particularly important when paying dividends to a foreign parent company or shareholder, paying royalties or service fees to a non-resident, or determining tax residency when an individual operates across two jurisdictions.
Without a DTT, dividends paid to non-residents are subject to 5% withholding tax in Georgia. Under certain DTTs – notably with UAE and several European jurisdictions – this rate can be reduced to 0%.
Always verify: DTT benefits are not automatic. The recipient must provide proof of tax residency in the treaty country, and the paying company must apply the reduced rate at source.
Key Tax Deadlines in Georgia
Corporate Income Tax is filed and paid monthly by the 15th of the following month, triggered at the point of profit distribution. VAT returns are due monthly by the 15th. Personal Income Tax withheld from salaries is also due by the 15th monthly. The annual CIT declaration is due by April 1. Property Tax is due annually by November 1.
All filings are submitted digitally through rs.ge – Georgia’s tax administration is fully paperless.
Common Compliance Mistakes Foreign Businesses Make
- Missing the VAT registration deadline. The 2-day window after crossing 100,000 GEL is strict. Late registration results in penalties calculated from the date of threshold crossing, not the date of registration.
- Misclassifying the corporate tax trigger. CIT is due on profit distribution, not profit generation. Many foreign founders assume annual filing like in their home country – the Georgian system is transactional, not calendar-based.
- Not applying DTT rates. Companies regularly over-withhold on dividends or royalties paid to foreign recipients because the treaty paperwork wasn’t collected in advance. This is recoverable but creates cash flow friction.
- Confusing small business eligibility. The 1% small business regime is not available to all activity types and is incompatible with certain corporate structures. Confirm eligibility before filing under this regime.
- Treating pension contributions as optional. Since 2019, pension contributions are mandatory for all employed individuals. Failure to enroll employees creates retroactive liability.
How Professional Accounting Support Helps
The Georgian tax system is simple by design – but compliance precision still matters. Filing deadlines are strict, VAT registration penalties are retroactive, and structural decisions (which entity type, which tax regime, whether to register for VAT voluntarily) have long-term financial implications.
Our accounting firm provides foreign businesses and entrepreneurs with company registration and tax regime selection, monthly VAT and PIT filing, payroll processing and pension contribution management, annual CIT declaration and tax planning, DTT analysis and withholding tax optimization, Revenue Service representation and audit support, and English-language reporting and advisory.
