Accounting and Taxation in Georgia

At ReadyMade.ge, we offer professional accounting and taxation services in Tbilisi, Georgia — tailored for LTD companies, IT businesses with Virtual Zone status, and Free Trade Zone companies. Our experienced team provides accurate bookkeeping, tax declarations, VAT compliance, and payroll services, all delivered in clear English for your convenience. Whether you're a startup or an established business, we help you stay fully compliant with Georgian tax laws and avoid costly penalties. With monthly packages designed for small and medium-sized companies, we are your reliable partner for transparent and affordable accounting support in Georgia.

 

Accounting services and bookkeeping price list

Accounting services and bookkeeping
Start up / small size company - non VAT payer	400 GEL / EURO 135 / monthly fee
Start up / small size company - VAT payer	500 GEL / EURO 165 / monthly fee

 
What is included:

1. Service is for small company who has only few employees (max. up to 5)
2. Using Bank transaction for the business activities
3. Monthly transaction is no more than 100
4. Basic tax advisory 

 

Taxation types in Georgia

There are common state and local taxes.

 

Common State Taxes in Georgia

Georgia offers a streamlined tax system with several key taxes applicable to individuals and businesses. Below is an overview of these taxes:​

1. Personal Income Tax

• Resident Individuals:

  • Definition: An individual is considered a tax resident if they are present in Georgia for 183 days or more during any continuous 12-month period.​

  • Tax Rate: A flat rate of 20% applies to taxable income.​

  • Filing Requirements: Typically, individuals are not required to file personal income tax returns; instead, employers withhold and remit taxes monthly via electronic declarations submitted to the Revenue Service's web portal.​

  • Taxable Income Sources:

    • Salary: 20%

    • Dividends: 5%

    • Interest: 5%

    • Royalties: 20%

• Non-Resident Individuals:

  • Taxation Scope: Non-residents are taxed only on income sourced within Georgia.​

  • Tax Rates on Georgian-Sourced Income:

    • Dividends: 5%

    • Interest: 5%

    • Royalties: 20%

    • Salary Income: 20% (if the individual is present in Georgia for more than 90 days within any continuous 12-month period)

    • Lease Payments: 20%

    • Other Income Considered as Georgian-Sourced: 10%

2. Value Added Tax (VAT)

• Registration Threshold: Entities engaged in economic activities must register for VAT if their taxable transactions exceed 100,000 GEL during any continuous 12-month period.​

• Standard Rate: The VAT rate is 18% of the taxable turnover.​

• VAT Credit Mechanism: Registered taxpayers have access to a virtual account on the Revenue Service's web portal, where they can accumulate VAT credits. These credits can be utilized to offset future VAT liabilities, income tax, or other taxes as stipulated by Georgian law.​

3. Excise Tax

• Applicability: Excise taxes are levied on specific goods and services, including but not limited to tobacco products, alcohol, and fuel. Rates vary depending on the product or activity.​

4. Import Tax

• Rates: Import duties in Georgia vary based on the type of goods imported. Common rates are 0%, 5%, or 12%, depending on the product classification.​

5. Property Tax

• Individuals: Property tax is levied at a rate of up to 1% of the market value of the property. However, individuals with an annual income below 40,000 GEL are exempt from this tax. For those earning between 40,000 GEL and 100,000 GEL, rates range from 0.05% to 0.2%; incomes exceeding 100,000 GEL are taxed at rates between 0.8% and 1%.​

6. Tax Incentives and Exemptions

• Small Business Status: Individual entrepreneurs with an annual turnover of less than 500,000 GEL may qualify for Small Business Status, allowing them to pay a reduced tax rate of 1% on their turnover. If the turnover exceeds 500,000 GEL, the rate increases to 3%.​

• Micro Business Status: Individuals with an annual turnover below 30,000 GEL and no employees can register as a Micro Business, granting them exemption from income tax on their business income.​

• Exempt Individuals: Certain individuals, such as veterans, mothers with many children, and persons with disabilities, may be eligible for income tax exemptions.

 

Reverse Charge VAT in Georgia

In Georgia, the Reverse Charge VAT mechanism shifts the responsibility for reporting and paying VAT from the foreign service provider to the Georgian recipient. This applies when a Georgian-registered business purchases services from a non-resident entity. The standard VAT rate is 18%.

Key Points:

1. Applicability:

   • All services purchased from foreign businesses by Georgian companies are subject to Reverse Charge VAT. This includes digital subscriptions, consulting services, and other intangible services.​

   • The obligation exists regardless of whether the Georgian company is VAT-registered or not. ​

2. Mechanism:

   • The foreign service provider issues an invoice without Georgian VAT.​

   • The Georgian recipient must calculate 18% VAT on the service's value, declare it in their tax return, and remit the amount to the Georgian tax authorities.​

Achieving Effective Zero VAT Liability

To mitigate the financial impact of Reverse Charge VAT, Georgian businesses can consider the following strategies:​

1. VAT Registration:

   • Businesses with an annual taxable turnover exceeding 100,000 GEL are required to register for VAT.

   • Voluntary registration is possible and can be beneficial for businesses that frequently incur Reverse Charge VAT.

2. Input VAT Credit:

   • Once VAT-registered, a business can offset the Reverse Charge VAT (output VAT) against input VAT incurred on other business expenses.​

   • This means that while the business declares and "pays" the Reverse Charge VAT, it simultaneously claims it back as input VAT, effectively nullifying the payment.

Example:

A Georgian IT company purchases software services from a foreign provider for 10,000 GEL.​

• Without VAT Registration:

  • The company must declare and pay 1,800 GEL (18% of 10,000 GEL) as Reverse Charge VAT.

  • This amount is an additional cost to the company.​

• With VAT Registration:

  • The company declares 1,800 GEL as output VAT.​

  • Simultaneously, it claims 1,800 GEL as input VAT.​

  • The net VAT payable is 0 GEL, achieving effective zero VAT liability.​

Considerations:

• Domestic Sales: If the company also sells services within Georgia, it must charge 18% VAT to its clients. However, the input VAT credits from purchases (including Reverse Charge VAT) can offset the VAT collected from clients.​

• Administrative Compliance: VAT registration entails regular filing of VAT returns and adherence to compliance requirements.​

 

For Georgian businesses engaging in frequent international service transactions, registering for VAT and utilizing the input VAT credit mechanism can effectively neutralize Reverse Charge VAT liabilities. It's advisable to consult with a tax professional to assess the specific benefits and obligations related to VAT registration based on your business activities.

 

Local Taxes in Georgia

Georgia imposes various local taxes on property and certain business activities. Below is an overview of these taxes:​

1. Property Tax

• Taxable Assets: Property tax applies to real and personal property, including land, buildings, machinery, equipment, and certain intangible assets.​

• Assessment Rate: All property in Georgia is taxed at an assessment rate of 40% of its fair market value. For example, a property valued at 100,000 GEL would have an assessed value of 40,000 GEL.​

• Tax Rates: Local governing authorities set the millage rate, which determines the amount of tax owed. One mill represents a tax liability of one dollar per 1,000 GEL of assessed value. The average county and municipal millage rate is 30 mills.​Department of Revenue

• Exemptions: Various exemptions may apply, such as homestead exemptions for primary residences, which can reduce the taxable value of a property.​

2. Excise Tax

• Applicability: Excise taxes are levied on specific goods and services, including tobacco products, alcohol, and fuel. Rates vary depending on the product or activity.​

3. Import Tax

• Rates: Import duties in Georgia vary based on the type of goods imported. Common rates are 0%, 5%, or 12%, depending on the product classification.​

 

 

Employment Regulations in Georgia

Georgia's labor laws outline the rights and responsibilities of both employers and employees. Key aspects include:​

1. Employment Eligibility

• Residents: Individuals aged 16 and above are eligible for employment in Georgia. Employment contracts are mandatory, and while health insurance is not obligatory, employers must provide insurance for roles involving physical labor.​

• Non-Residents: Individuals residing in Georgia for less than 183 consecutive days within a 12-month period are considered non-residents. Non-residents are subject to the same income tax rate of 20% as residents and generally receive similar employment benefits. However, specific exceptions may apply based on the nature of the business, such as international transportation or oil and gas industries.​

2. Working Hours and Breaks

• Standard Workweek: The typical workweek consists of 40 hours, usually spread over five days.​

• Breaks: While Georgian labor law does not mandate specific break periods, employers commonly provide short breaks during the workday.​

3. Leave Entitlements

• Annual Leave: Employees are entitled to 24 working days of paid annual leave per year.​

• Unpaid Leave: An additional 15 calendar days of unpaid leave may be granted annually.​

• Sick Leave: Employees can take leave for medical reasons upon presenting appropriate medical documentation. Compensation during sick leave is subject to the terms outlined in the employment contract.​

4. Compensation and Salaries

• Minimum Wage: Georgia's minimum wage is 5.15 GEL per hour. However, most employees are covered under the federal Fair Labor Standards Act (FLSA), which sets the minimum wage at 7.25 USD per hour.​

• Average Salaries: Salaries vary based on education, experience, and industry. On average, net monthly salaries range from 500 GEL to 2,500 GEL, depending on the sector and role.​

5. Termination and Severance

• At-Will Employment: Georgia follows an "at-will" employment doctrine, allowing either the employer or employee to terminate the employment relationship at any time without cause, provided it does not violate any contractual agreements or discrimination laws.​

• Severance Pay: There is no statutory requirement for severance pay in Georgia unless stipulated in an employment contract or collective bargaining agreement.

 

More information about Tax Law of Georgia and legal support of your lawyers you can find out here at Lawyers.ge.