Introduction: Georgia, strategically positioned between Eastern Europe and Western Asia, has become an enticing business destination due to its favorable environment and simplified tax system. In this article, we will explore the various taxes that companies in Georgia are obligated to pay, including Value Added Tax (VAT), Income Tax, Dividends Tax, and the distinctive Profit Taxation system, often referred to as the Estonian Model.

Value Added Tax (VAT): In Georgia, the standard VAT rate is 18%. It is essential for businesses to comply with VAT regulations. Certain sectors may benefit from exemptions, and a company becomes obligated to pay VAT once its turnover reaches 100,000 GEL.

Exemptions and Thresholds: Some sectors in Georgia are exempt from VAT, providing relief for businesses in specific industries. Additionally, the obligation for a company to become a VAT payer arises once its turnover reaches 100,000 GEL.

Income Tax: Companies in Georgia are subject to a 15% Income Tax on their profits. Certain exemptions and deductions may apply, and accurate financial record-keeping is vital for compliance.

Dividends Tax: Dividends distributed by Georgian companies to shareholders are subject to a 5% tax rate, withheld at the source.

Profit Taxation – The Estonian Model: Georgia’s unique Profit Taxation system, resembling the Estonian Model, taxes only distributed profits. Companies are not taxed on retained earnings, promoting reinvestment.

Import Tax: Georgia imposes import taxes on certain goods. Importers should be aware of applicable rates and regulations to ensure compliance.

Navigating the Georgian Tax System: Refer to the Georgian Tax Code on ALSERVICE’s website for comprehensive information on taxes, exemptions, and procedural guidelines. Seeking professional advice from tax experts is crucial.

Conclusion: Georgia’s business-friendly environment, coupled with its simplified tax system, makes it an increasingly attractive destination for companies. Understanding the nuances of taxes, including VAT, Income Tax, Dividends Tax, and the unique Profit Taxation system, is key to thriving in this dynamic economic landscape. Stay informed and seek expert guidance to manage tax responsibilities effectively and contribute to Georgia’s growing reputation as a hub for business and investment