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Tax Guide: Top 10 Tax Incentives in Georgia

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5/4/2023

Over 2022, the Georgian economy has grown by 10.1%, according to Sakstat. The country welcomed the registration of a record number of new companies, many of them owned by foreigners. Those planning to start their operations in Georgia might be wondering why entrepreneurs from across the world come to this sunny country to develop their businesses. 

Read about the 10 most popular tax incentives actively employed by company owners to alleviate their tax burden and see if your business is eligible for preferential treatment.

1. 0% VAT for companies with annual turnover below 100,000 GEL

The value-added tax in Georgia is 18% of the turnover or import of goods and services. However, with low annual turnover, VAT might not be charged.
How to get the incentive: if your company's turnover over the past 12 months doesn't exceed 100,000 GEL, you don't have to pay VAT. 
(art. 165 of the Tax Code of Georgia).

2.  0% TAV for services rendered by a Georgian company abroad

Value-added tax in Georgia is not paid on the export of services.   
How to get the incentive: if the buyer of the goods or services is located outside of Georgia, VAT is 0%. 
(art. 172 and art. 161 of Chapter 1 of the Tax Code of Georgia).

3. Tax preferences for international companies

The International Company status significantly reduces tax payments and might interest businesses with a high tax burden:
- 5% profit tax (instead of 15%)
- 5% personal income tax (instead of 15%)
- 0% dividend tax (instead of 5%)
(art. 23 of the Tax Code of Georgia).
How to get the incentive: to receive the International Company status, the business must be registered in Georgia with 50% of its shareholders not being Georgian residents. Restrictions on the minimum operation period of the company and its line of activity apply.

4. Tax preferences for IT companies

Georgia-operating companies in the sphere of information technology can receive a special status of a Virtual Zone. This status allows the IT company to stop paying a number of taxes:
-  0% tax on income from the sale of products or services abroad
- 0% VAT on products sold abroad
- 0% customs duty on export operations
The company only has to pay a 5% dividend tax.
How to get the incentive: to register as a Virtual Zone, the company has to receive a special electronic certificate granting the right to preferential payment of taxes. 
(art. 99 and art. 162 of Chapter 1 of the Tax Code of Georgia).

5. Tax preferences for Free Industrial Zone companies

Georgia has three Free Industrial Zones: Tbilisi, Kutaisi, and Poti. Companies based in them receive the following preferences:
- 0% VAT
- 0% profit tax
- 0% dividend tax
- 0% property tax
- 4% tax on proceeds from goods turnover in the territory of Georgia
How to get the incentive: to receive the status, the company must be registered in one of Georgian Free Industrial Zones (art. 9 and art. 10 of the Law of Georgia "On Free Industrial Zone").

6. Tax preferences for Micro Businesses

Individual entrepreneurs working without employees may be completely exempted from the tax burden.
How to get the incentive: to qualify as a Micro Business with a 0% tax rate, the individual entrepreneur's income must not exceed 30,000 GEL. 
(art. 84 of the Tax Code of Georgia).

7. Tax preferences for Small Businesses

The most popular tax status when registering is an individual entrepreneur with the status of a Small Business. Such entrepreneurs have the right to hire employees, and the tax rate will be only 1%.
How to get the incentive: to qualify as a Small Business, the individual entrepreneur's income must not exceed 500,000 GEL. 
(art. 88 of the Tax Code of Georgia).

8. 0% profit tax when reinvesting into business development

Georgia has an economic model of capital reinvestment, in which the income tax is not levied.
How to get the incentive: the profit tax is 0%, as long as the company invests its capital gains in business development. 
(art. 88 of Chapter 1 of the Tax Code of Georgia).

9. 0% personal income tax on income received outside of Georgia

The personal income tax in Georgia is 20%. However, tax residents must pay the income tax only on income received from domestic sources.
How to get the incentive: The personal income tax will be 0%, as long as it's received from foreign sources.
(art. 80 and art. 82 of the Tax Code of Georgia).

10. Pension contributions for employees are only 2%

When registering an employee in a Georgian company, the employer pays insurance premiums to the pension fund equal to 2%. The employee deducts an additional 2% from their salary. 
How to get it: for the employer to pay the 2% pension contributions, the employee must be a Georgian citizen or permanent resident.  Foreign citizens don't require an official work permit, but they will have to take care of their pension savings on their own.
(Law of Georgia "On Pension Savings"). 

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