The financial and tax reporting in Georgia presents a very convenient system of submitting documents, at the same time it meets every modern international and European standard. Since 2000 the Georgian Government has introduced several reforms to ease the accounting and tax scheme in Georgia. Firstly the government approved the standards of accounting and financial audit soon after, they have reduced the tax burden.

Entrepreneurs and large companies are in the primary use of a reporting system. Given the low tax rate, Georgia attracts progressively more foreign capital, which raises the demand of entrepreneurs to have a thorough knowledge of what the tax and other regulatory authorities rely upon. In this article, we will look at how to pay taxes in Georgia and how to submit a current financial report correctly.

Specifics of the Financial Reporting in Georgia

The state constantly controls the activities of organizations to prevent cases of money laundering, capital smuggling, or financing terrorism. 

 The Law on Accounting and Audit of Financial Statements regulates the submission of the annual financial report of the company, which is processed in strict compliance with the legislation and the requirements of personal data protection. Financial reporting in Georgia is administered by the International Financial Reporting Standards (IFRS). 

Based on the Georgian legislation, companies are required to submit annual financial statements. All necessary data submission is processed electronically. According to the normative documents, financial statements must be published before 1 October of the year following the reporting.

The annual financial report includes:

  • account balance-sheet;
  • A statement of profits and losses;
  • clarification of the fund movement in the company’s accounts;
  • The Results of the company’s economic activity for the year;
  • The company’s current financial status;
  • explanatory note;

4 Categories of Enterprise in Georgia

a) the total value of assets exceeds GEL 50 million;

b) income exceeds GEL 100 million;

c) an average number of employees exceeds 250 people for the reporting period;

а) the total value of assets does not exceed GEL 50 million;

b) income not exceeding GEL 100 million;

c) the average number of employees for the reporting period does not exceed 250 people;

а) the total value of assets does not exceed GEL 10 million;

b) income does not exceed GEL 20 million;

c) the average number of employees for the reporting period does not exceed 50;

а) the total value of assets does not exceed GEL 1 million;

b) income does not exceed GEL 2 million;

c) the average number of employees for the reporting period does not exceed 10;

The entities from categories three and four are granted a deferral in submitting an annual financial statement until the 1st of October 2021. An annual financial report is submitted to the Accounting, Reporting and Audit Oversight Service.

Submission of the Financial and Tax Reporting for small and medium businesses in Georgia ran under a simplified scheme. The volume of reporting may vary from two to several hundred pages, Depending on the extent of the enterprise.
Conveniently, reports are submitted electronically. What is more, the information is publicly available and is transparent for all citizens. For the document to be accepted, the following company details must be specified:

  • The organizational and legal form of the enterprise;
  • Legal and Physical Address;
  • Name of the Organization;
  • The registering Body;
  • Registration Number.

The detailed information on the financial status of an enterprise, the company’s creditworthiness, and financial reports of its activity are available through the financial and tax reporting in Georgia. Financial auditing is also a mandatory procedure that compares the company’s performance against the annual financial report. Beginning from January 2019, all companies, except the organizations of the third and fourth categories, must be audited. In this case, the audit envisages that the same of the reporting of small and medium-sized businesses will be confidential.

Specifics of Tax Reporting in Georgia

Georgian jurisdiction is not entirely free from taxes, but they are comparatively low, in addition, the tax regime is considered to be one of the most transparent, liberal, reliable, and simple among other countries in the world. According to the Global Competitiveness Report, Georgia was ranked 9th in the list of countries with a lowered taxation scheme.
Given the past several years’ reforms, the tax reporting in Georgia reduced the tax burden on legal entities and simplified collection procedures. From this today taxes are reported as follows:

  • all amounts in the report are indicated in the GEL;
  • declaration submission for the reporting month processed on a monthly basis, by the 15th of the next month; declarations are filled based on primary documents, which in most cases are available on the tax service portal in electronic form.

In Georgia, taxes are gathered at the local and State (national) level. There are six main taxes:

  • Profit Tax (on dividends (5%)) – 15%.
  • Income tax on the population (dividends 5 per cent) – 20 percent.
  • Value added tax (except for medical care, education and export) – 18%.
  • Import tax (customs duties) – 0%, 5% or 12%.
  • Excise tax.
  • Property tax – up to 1%.

From 1 January 2019, a compulsory universal pension fee for individuals and businesses was introduced (self-employed persons have the right to waive the charge). The pension Tax rate is 2% of the wage, the same amount is paid for an employee by the enterprise. The pension fee is mandatory for persons under the age of 40 as of August 6, 2018, individuals older may refuse to pay the pension tax.

All taxes in Georgia, except property tax, are national. Under the Economic Freedom Act, the Government has no legal right to raise domestic taxes (except for excise) or introduce new taxes without public approval backed by a referendum.

To attract more foreign entrepreneurs and expand the sphere of businesses, the taxes in Georgia are paid by a very convenient scheme. To avoid bureaucracy and speed up the process of controlling the activities of a legal entity, all documents are submitted electronically.

How to Submit a Report

The more accurate and detailed the financial and tax disclosure statements are the chances to violate the law and face severe charges are less likely. Therefore, before independently composing documents, two normative provisions should be carefully studied: the Tax Code of Georgia and articles of the law “On Accounting, Reporting, and Audit”.

Contact us, and we will help you to understand all the nuances of taxation in Georgia.