In Georgia, starting from 2017, legal companies have the right not to pay profit tax if they invest in business development. Read more about what tax on dividends in Georgia.
Dividends are any income (including – in the form of interest from preferred shares) of the shareholder from the shares or rights (shares) received as a result of the distribution of profits, and distributed by the legal entity to shareholders.
Dividend Tax in Georgia
The dividend tax is 5% and is calculated on the basis of the Estonian accrual model. It is paid by the company (LLC). The payment is levied at the same time as the income tax when the company withdraws the income to the personal account of the beneficiary (company founder, co-founder). When profits are withdrawn, 15% of the amount withdrawn is paid first – as profit tax, and the dividend on the interest paid is 5%. The tax on dividends is subject to a monthly declaration. The tax agent is the company, not an individual.
It is possible to set off paid taxes from the income received by the beneficiary – non-resident in the country of residence in the presence of an agreement on avoiding double taxation between Georgia and the country of residence.
How to calculate the dividend tax?
We give an approximate calculation for 1000 GEL from an ordinary LLC, so that you could easily understand how the tax on dividends is calculated.
We pay profit tax:
We pay dividend tax:
- 238.39*15% = where 185.76 profit tax 15% is paid to the budget
- 238.39 – 185.76 = where 52.63 dividend tax 5% is paid to the budget
IT companies in the virtual zone of Georgia do not pay VAT and corporate taxes, except this tax on dividends. Dividend tax in the virtual zone can be calculated on the same example with GEL 1000:
1000/0.95=1052.63, where 52.63 dividend tax 5% is paid to the budget.
If you have difficulties in calculating the dividend tax on your own or filling in the tax return, you can ask our specialists for help. Leave your application on the website and we will call you back and give you free advice.