Georgia Tax Regime

Georgia operates one of the most distinctive corporate tax systems in the region: since 1 January 2017 it has followed the Estonian model of corporate income tax, under which retained and reinvested profits are not taxed at all, and the standard 15% corporate income tax (CIT) is triggered only on distribution — principally on dividend payments, but also on a defined set of deemed-distribution events such as non-business expenses, free-of-charge transfers and excess representative expenses. This deferral-based design, combined with a broadly territorial and low personal tax burden, a small-country free industrial zone and international company regime, and one of the simplest VAT and administration frameworks in the region, makes Georgia a distinctly investment-friendly jurisdiction. The system is not a full profit exemption: it defers the timing of taxation to the point of distribution rather than eliminating the underlying liability.

1.1 Sources

1.2 Recent developments

Georgia has maintained the Estonian-model distribution tax without material rate change since its 2017 introduction, while narrowing its scope through clarifying guidance on what constitutes a non-business expense and a deemed distribution. From 1 January 2023, commercial banks, credit unions, microfinance organisations and other loan providers were carved out of the standard 15% distribution-based regime and made subject to a 20% CIT rate, reflecting policy concern about the deferral model's interaction with the financial sector's capital and dividend practices. Georgia continues to expand its network of free industrial zones and maintains its International Company and Virtual Zone status regimes to attract technology, logistics and shipping-adjacent investment.

Headline statutory corporate income tax rate for a resident company. Where sub-national (state, provincial, cantonal or municipal) corporate taxes apply, the combined rate reported by the OECD is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

Top marginal statutory personal income tax rate on employment income for a resident individual. Where sub-national (state, provincial, cantonal or municipal) income taxes are a standard part of the system, the combined top rate is shown. Projected 2026–2028 rates carry the current rate forward unless a change is already enacted or officially scheduled. As-of 2026.

2.1 Rates and residence

Resident enterprises are subject to CIT on worldwide income; non-resident enterprises operating through a permanent establishment (PE) in Georgia are subject to CIT on Georgian-source income attributable to that PE. The standard CIT rate is a flat 15%, but — reflecting the Estonian distribution model described in section 2.2 — this rate is applied not to annual accounting profit but to the grossed-up value of distributions and other specified taxable events, meaning that a profitable company retaining and reinvesting all of its earnings can have a CIT liability of zero in a given year. A 20% CIT rate applies specifically to commercial banks, credit unions, microfinance organisations and loan providers, effective from 1 January 2023, applied to the same distribution-triggered base as the standard regime. There are no regional or local income taxes in Georgia.

2.2 The Estonian distribution model — mechanics

Under the distribution-based system, a company does not compute annual taxable profit by netting gross income against deductions in the traditional sense; instead, CIT of 15% (20% for banks and lenders) is triggered on the grossed-up value of four categories of transaction: (i) distributed profit, meaning dividends paid to shareholders in monetary or non-monetary form; (ii) costs incurred that are not related to economic activity, including non-documented expenses, expenses not aimed at generating income, and interest paid above the government-set benchmark rate (24% per annum); (iii) free-of-charge delivery of goods or services or transfers of funds, including inventory or fixed-asset shortages discovered on stocktake; and (iv) representative (entertainment) expenses exceeding 1% of the greater of the company's revenue or expenses in the prior year. Because the tax is levied on a grossed-up basis, the effective cash cost of a GEL 100 dividend is GEL 100 × 15/85 ≈ GEL 17.6 of CIT, i.e. 15% of the total (dividend plus tax) rather than 15% of the dividend alone.

2.3 Dividends and participation

Dividends distributed between two Georgian resident legal entities are not subject to CIT, avoiding cascading taxation within domestic corporate chains. Dividends received by a Georgian company from a foreign enterprise are likewise excluded from the distribution tax base, unless the foreign payer is registered in a jurisdiction with a preferential (low-tax or blacklisted) tax regime, in which case anti-abuse rules bring specified categories of payment and transaction with such persons into immediate taxation. A Georgian PE of a non-resident enterprise is treated as making a deemed distribution of the profit it would have earned as an independent enterprise carrying on the same or a similar activity under similar conditions, ensuring branch profits eventually bear the same distribution-triggered tax as a subsidiary.

2.4 Anti-deferral features — deemed distributions and credits

To prevent indefinite deferral through disguised profit extraction, the Tax Code treats specified cash outflows to related and low-tax-jurisdiction counterparties as immediately taxable even absent a formal dividend — including loans to individuals or non-residents, acquisitions of shares or capital contributions in non-resident enterprises, purchases of debt securities issued by low-tax-jurisdiction persons, and payment of contractual penalties, advances or debt-claim acquisitions involving such persons. Because these rules can tax cash movements that are not, in substance, profit distributions, the Code allows taxpayers to credit back CIT previously paid on such outflows once the underlying cash is returned — for example, on repayment of a loan, return of an advance in the form of goods or services, or receipt of consideration for a disposed debt security or shareholding — proportionate to the amount returned.

2.5 Income determination for non-distribution purposes

Because CIT is triggered by events rather than annual net profit, most companies do not need to compute a traditional taxable-income figure for CIT purposes; however, accounting profit, VAT, payroll and other tax bases still require normal income and expense recognition under Georgian financial reporting rules (IFRS for most taxpayers, IFRS for SMEs or simplified accounting for micro and small businesses). Depreciation, cost recognition and documentation standards remain relevant for other tax bases and for identifying whether an expense falls within the non-business-expense deemed-distribution category.

2.6 Losses

Because the standard CIT base is not an annual net-profit computation, the concept of a carried-forward trading loss has limited application under the distribution model — a company with no distributions or deemed-distribution events in a loss year simply has no CIT liability for that year, and there is nothing to relieve going forward. Loss carryforward concepts remain relevant for taxpayers computing income under other bases (for example, banks' and lenders' 20% regime and any residual profit-based elements) and for property and other taxes that retain conventional income computation.

2.7 Group taxation

Georgia does not operate a formal fiscal consolidation or group-relief regime for CIT purposes; each legal entity is assessed separately on its own distributions and deemed-distribution events. Intra-group dividends between resident Georgian companies are excluded from the tax base (section 2.3), which in practice allows profit to be moved up a domestic group chain without incremental CIT until it is ultimately distributed outside the group, but there is no mechanism to offset one group member's position against another's within a single return.

2.8 Controlled foreign companies

Georgia does not operate a broad CFC attribution regime comparable to the EU ATAD model; instead, its anti-deferral protection operates primarily through the immediate taxation of specified outbound payments and transactions with persons in preferential (low-tax or blacklisted) jurisdictions described in section 2.4, together with transfer pricing rules on cross-border related-party pricing. Investors from ATAD jurisdictions should note that their own home-country CFC rules may still apply to a low-taxed Georgian subsidiary that retains profits under the distribution deferral, even though Georgia itself imposes no current tax on the retained amount.

2.9 Transfer pricing

Georgia applies the arm's-length principle to controlled transactions, informed by OECD Transfer Pricing Guidelines methodology, with documentation obligations for international related-party transactions above statutory thresholds and country-by-country reporting exposure for Georgian constituent entities of large multinational groups. Because non-arm's-length pricing that shifts value to a related low-tax-jurisdiction counterparty can itself constitute a deemed distribution or a non-business expense under section 2.4, transfer pricing and distribution-tax exposure should be assessed together for cross-border intra-group dealings.

2.10 Incentives

Georgia offers several targeted regimes alongside the general distribution deferral: Free Industrial Zones offer resident enterprises exemption from CIT, property tax and import VAT/customs duty on qualifying zone activity (with distribution to shareholders outside the zone potentially triggering tax); International Company status (available to qualifying IT and shipping-related businesses) reduces CIT to 5% on distributed profit and provides payroll and dividend tax relief; and Virtual Zone status for IT companies exporting services abroad provides a 0% CIT exemption on qualifying export income. Small business and micro business statuses provide simplified, low, turnover-based taxation for qualifying individual entrepreneurs.

2.11 Pillar Two

Georgia has not implemented a Pillar Two global minimum tax regime (income inclusion rule, undertaxed profits rule or qualified domestic minimum top-up tax). Georgia's distribution-deferral model and its International Company and Virtual Zone incentive rates could result in effective tax rates below the 15% Pillar Two minimum for in-scope multinational groups with Georgian constituent entities; such groups should monitor top-up taxation risk under an ultimate parent's income inclusion rule or another group entity's undertaxed profits rule, since Georgia itself currently has no qualified domestic minimum top-up tax to absorb that risk domestically.

2.12 Branch income and reorganisations

A Georgian branch (permanent establishment) of a non-resident enterprise is subject to the same 15% distribution-triggered CIT as a subsidiary, applied to the PE's deemed distribution of the profit it would have earned as an independent, similarly placed enterprise; there is no separate branch remittance tax beyond this deemed-distribution mechanic. Domestic reorganisations — mergers, divisions and conversions between resident entities — are treated under general Tax Code provisions; because reorganisation-related transfers can potentially fall within the free-of-charge transfer or non-business-expense deemed-distribution categories, restructurings should be reviewed against those provisions before implementation to avoid inadvertently triggering CIT.

3.1 Residence and rates

An individual is Georgian tax resident if present in Georgia for 183 days or more in any continuous 12-month period ending in the relevant tax year, or under specified special-status rules (such as high-net-worth individual residency without the day-count test, subject to conditions). Resident individuals are taxed on Georgian-source income; foreign-source income of resident individuals is generally outside the scope of Georgian personal income tax except for specified categories, reflecting the broadly territorial orientation of the personal tax system. Employment and most business income is taxed at a flat 20% rate.

3.2 Employment and business income

Employment income (salary, most cash and in-kind benefits) is taxed at a flat 20%, withheld by the employer at source through payroll. Individual entrepreneurs and self-employed persons are generally taxed at 20% on business income under the standard regime, though qualifying micro business status (very low turnover) can reduce the effective rate to 0%, and small business status (turnover up to the statutory threshold) taxes gross turnover at a reduced 1% rate (rising to 3% if the threshold is exceeded), materially lowering the burden for qualifying small entrepreneurs relative to the standard 20% rate.

3.3 Capital income and dividends

Dividends paid by a Georgian resident company to a resident or non-resident individual are generally subject to a final 5% withholding tax, reflecting the fact that underlying corporate profit has typically already borne the 15% distribution-based CIT at company level. Interest income is generally subject to a final 5% withholding tax as well. Capital gains on the disposal of Georgian real estate held for more than two years, and gains on disposal of shares in certain circumstances, may be exempt; other capital gains are generally included in taxable income at 20% (individuals) though specific exemptions apply to gains on securities traded on a recognised stock exchange.

3.4 Social contributions and pension

Georgia operates a funded pension scheme requiring contributions of 2% of gross salary from the employee, matched by 2% from the employer, with the state contributing a further 2% for qualifying lower and middle-income earners (tapering off at higher income levels); participation is mandatory for Georgian citizens under the retirement threshold, with limited opt-out rights for certain categories. There is no separate social security tax beyond the pension contribution and the personal income tax withheld on payroll, keeping Georgia's overall payroll tax burden markedly lower than in most European jurisdictions.

3.5 Inbound individuals

Georgia has no net wealth tax, no inheritance tax on transfers between close relatives, and no gift tax on most family transfers, though gifts and inheritances between unrelated persons above statutory thresholds can be taxable at 20%. High-net-worth individuals may apply for a special tax residency certificate without meeting the ordinary day-count test, subject to minimum asset or income thresholds, which can be attractive for individuals seeking Georgian tax residence for treaty or planning purposes. Individual property owners pay annual property tax at rates set by local municipalities within a statutory band.

Non-resident enterprises earning Georgian-source income other than through a PE are subject to withholding tax at source. Dividends paid to non-residents are taxed at 5%, reflecting the same underlying policy as the resident dividend rate, since corporate profit has generally already borne 15% CIT on distribution. Interest paid to non-residents is subject to 5% withholding, and royalties to 5%, while most other Georgian-source service income paid to non-residents without a Georgian PE is generally not subject to withholding under domestic law, in contrast to many comparator jurisdictions. Georgia's treaty network of more than 55 conventions can reduce these already-modest domestic rates further, though in practice many treaty rates converge with or exceed the low domestic statutory rates.

Relief at source under a treaty requires the non-resident recipient to provide a valid certificate of tax residence to the Georgian payer; absent this, withholding applies at the domestic statutory rate with refund available on application. Because Georgia's domestic dividend, interest and royalty withholding rates are already low by regional standards, treaty shopping incentives on outbound payments from Georgia are correspondingly limited compared with higher-withholding jurisdictions, though inbound investment structuring into Georgia via treaty jurisdictions remains relevant for the taxation of gains and for accessing mutual agreement procedures.

5.1 General anti-abuse and low-tax jurisdiction rules

The Tax Code contains a general anti-avoidance principle allowing the Revenue Service to look through transactions and arrangements lacking economic substance or genuine business purpose, particularly relevant to the deemed-distribution rules in section 2.4 that specifically target payments and transactions with persons registered in jurisdictions with preferential (low-tax) tax regimes. The Ministry of Finance maintains an official list of such jurisdictions, and transactions with counterparties there receive materially different (generally less favourable) tax treatment than equivalent dealings with counterparties elsewhere.

5.2 Exchange of information and international cooperation

Georgia participates in international exchange of information arrangements, including under its double tax treaty network and relevant multilateral instruments, and has continued to expand its participation in automatic exchange of financial account information consistent with international standards. Georgia is a signatory to the OECD/G20 multilateral instrument, which modifies the operation of covered double tax treaties with anti-abuse provisions including a principal purpose test, relevant to structures seeking to access treaty relief on Georgian-source dividends, interest and royalties.

6.1 VAT

VAT is levied at a standard rate of 18% on the supply of goods and services in Georgia and on imports, with zero-rating for exports and international transport and specified exemptions for financial services, education, healthcare and certain agricultural and land transactions. Mandatory VAT registration applies once taxable turnover over any continuous 12-month period exceeds GEL 100,000; voluntary registration is available below the threshold. VAT returns are filed monthly, by the 15th of the following month, with input VAT generally recoverable against output VAT for taxable business activity.

6.2 Property, excise and other taxes

Property tax is levied by local municipalities on buildings, land and, for individuals above an income threshold, other qualifying assets, generally up to 1% of value for legal entities and on a progressive scale (up to 1%) for individuals depending on family income. Excise duties apply to fuel, tobacco, alcohol, and motor vehicles at specific rates per unit or engine size. Import duties apply under Georgia's customs tariff, materially liberalised through free trade agreements with the EU (under the Deep and Comprehensive Free Trade Area), the countries of the region and other partners. There is no net wealth tax, and no separate payroll tax beyond pension contributions and the personal income tax withheld on salary.

7.1 Filing, assessment and audit

The tax year is the calendar year. Because standard CIT is event-triggered rather than an annual net-profit computation, CIT returns are generally filed monthly, by the 15th of the month following a month in which a taxable distribution or deemed-distribution event occurred, with payment due by the same date; a company with no such events in a given month has no filing obligation for that period. The Revenue Service, under the Ministry of Finance, administers assessment and audit on a risk-based approach, with a general statute of limitations of three years from the relevant filing deadline, extendable in cases of fraud or non-filing.

7.2 Rulings, appeals and penalties

Taxpayers may request binding rulings from the Revenue Service on the tax treatment of specific transactions, which is particularly valuable given the fact-sensitive boundary between ordinary business expenses and the non-business-expense deemed-distribution category. Assessment disputes are appealable first to the Revenue Service's dispute resolution council and thereafter to the administrative courts, with further appeal available to the Supreme Court of Georgia on points of law. Penalties for late filing, late payment and understatement are set as fixed percentages of the tax due, with interest accruing on overdue amounts; voluntary disclosure before an audit typically reduces penalty exposure.

Because the standard CIT liability arises only on distribution or a deemed-distribution event, groups with predictable annual dividend policies commonly plan the timing of distributions around cash-flow needs rather than around a fixed annual assessment date, in contrast to conventional annual-profit CIT systems. Late payment attracts statutory interest in addition to fixed-percentage penalties.

9.1 Entity choice

The limited liability company (LLC) is the standard vehicle for both domestic and foreign investors, with no statutory minimum capital requirement and straightforward incorporation, typically completed within one business day through the National Agency of Public Registry. A joint-stock company suits capital-market ambitions or larger multi-shareholder structures. Branches of foreign companies are permitted and, as described in section 2.12, are taxed identically to a subsidiary on a deemed-distribution basis, so the choice between branch and subsidiary in Georgia is driven more by liability, licensing and commercial considerations than by a material tax differential.

9.2 Structuring and incentives

Holding and operating structures should be designed around the distribution-deferral mechanic: retaining and reinvesting profit within a Georgian entity, or between Georgian entities via the intra-group dividend exclusion in section 2.3, defers CIT indefinitely, making Georgia attractive as a regional reinvestment or holding hub. Businesses in IT, shipping or export services should evaluate International Company (5% distributed-profit rate) or Virtual Zone (0% on qualifying export income) status, and light-manufacturing or logistics investors should evaluate Free Industrial Zone status, all of which layer on top of, rather than replace, the underlying distribution-tax mechanic. Care should be taken that intra-group loans, advances and non-documented expenses do not inadvertently trigger the deemed-distribution rules in section 2.4.

9.3 Worked effective-rate illustration

A Georgian LLC earns accounting profit of GEL 10,000,000 in the year and retains the entire amount for reinvestment, making no dividend payment and incurring no non-business expenses, free-of-charge transfers or excess representative costs. Under the distribution model, its CIT liability for the year is GEL 0, an effective current-year rate of 0% on accounting profit, since no taxable event under section 2.2 has occurred. In year two, the same company distributes a dividend of GEL 8,500,000 to its shareholders out of accumulated retained profit. Because CIT of 15% is levied on a grossed-up basis, the tax due is calculated as 8,500,000 × 15/85 = GEL 1,500,000, so that the total taxable base (dividend of 8,500,000 plus tax of 1,500,000) equals GEL 10,000,000, and CIT of GEL 1,500,000 is 15% of that GEL 10,000,000 base. If the recipient shareholders are non-resident individuals, no further Georgian withholding tax applies beyond the 15% already borne at company level, because dividends distributed by a standard-regime company out of profits that have already borne the 15% distribution CIT are not subject to the 5% outbound dividend withholding described in section 4 — investors should confirm current practice with a local adviser, as the interaction between the two layers is a frequently misunderstood feature of the regime.

9.4 Compliance

Expect monthly VAT compliance for registered taxpayers, event-driven (rather than calendar-driven) CIT filings, payroll withholding compliance for any employees, and — for International Company, Virtual Zone or Free Industrial Zone status holders — periodic confirmation of continued eligibility (export share, qualifying activity, or zone residency conditions). Transfer pricing documentation should be maintained for in-scope cross-border related-party transactions, and businesses dealing with counterparties in listed preferential-regime jurisdictions should specifically flag those transactions for the deemed-distribution analysis in section 2.4 before executing them.