Income Tax rules in Georgia

Georgia revenue

income

Who is an income taxpayer?

 

Income taxpayer is:

Resident natural person or the person who is actually in the territory of Georgia for 183 days or more within any continuous 12 calendar months;

  • Resident natural person or the person who is actually in the territory of Georgia for 183 days or more within any continuous 12 calendar months;
  • Non-resident natural person, receiving income from the source of payment in Georgia.
What is the taxable income for a resident natural person?

Taxable income is the difference between revenues and expenditures of amounts received during the calendar year.

What is the taxable income for a non-resident natural person?

Taxable income is the difference between amounts of gross income and expenses received in Georgia concerning the permanent establishment within the calendar year. The gross income of a non-resident natural person not relating to its permanent establishment shall be taxed without deductions (exclusion of expenses) with the source of payment. Non-resident natural person, who receives income from the sale of property, shall pay an income tax from the gross income received during the calendar year in Georgia, which is deducted from amounts of expenses relating to receipt of such income for this period.

Income Tax rates:
    • Taxable income earned by resident natural persons who are not subject to taxation in the source of payment in Georgia, are taxed at 20 percent.
Incomes subjecting to taxation at the source of payment are taxed:
      • • Salary – 20%
      • • Dividends – 5%
      • • Rates – 5%
      • • Royalties – 20%
Non-resident natural person is taxed at incomes received from the source of Georgia without deductions of the source of payment at the rate of:
      • • Dividend – 5%
      • • Rates – 5%
      • • Amounts paid for telecommunication service of international communication and transport services of international freights by enterprise, organization and/or individual entrepreneur – 10%
      • • Income earned by non-resident subcontractors in oil and gas operations defined by the Law of Georgia on Oil and Gas – 4%
      • • The amount paid for rental services for natural person – 20%
      • • Other funds, which are considered to be in Georgia as revenue – 10%
      • • Income earned in a form of wage – 20%
Within what term must be submitted and paid incoming tax declaration?

 

Declaration mode
Presentation deadline
Payment deadline
Annual Income tax DeclarationUntil the 1thof April of the following yearUntil the 1th of April of the following year
Annual income tax declaration of

termination

Termination of activities –

30 working days

Termination of activities –

30 working days

 

* Income tax declaration of the

source of payment

*declaration shall be presented by

individual entrepreneur who uses hired

labor and/or buys services from

unregistered individual and binds to

the rate of tax:

salary 20%; Royalties 20%;

of rates 5%.

Income earned by non-resident from

the source of Georgia is taxed with

the source of payment at the rate of:

salary 20%; return in a form of rates 5%;

other funds 10%.

For each accounting period, no

later  than the 15th day of

the following month

Upon payment of money

 

Entrepreneur natural persons, who carry out economic activities, with which principles and at what rate shall make the current (advance) payments of income tax?

Entrepreneur natural persons carrying out economic activities are obliged to make current payments to the budget according to annual tax of the previous tax year, in the following amounts:

      • • No later than May 15 – 25%
      • • No later than July 15 – 25%
      • • No later than September 15 – 25%
      • • No later than December 15 – 25%
How should we respond to the reduction of taxable income other than the previous year?

If a taxpayer’s estimated taxable income (profit) of current tax year, including tax privileges, is reduced by at least 50 percent in comparison with taxable income (profit) of the previous tax year, and he informs it to the relevant tax authority before current tax payment is due; the taxpayer has the right to reduce or not to pay current payments.

 

What kinds of incomes are exempt from income tax?
      • •Grant, state pension, state compensation, state academic scholarship, cumulative and refundable pension from non-state pension scheme in amount of contributions, the fellowship, and funds received from assignments and/or budget reserve funds stipulated by the budget for the purposes of assistances and single returns;
      • •Money and other prizes received by athletes and their coaches for winning Olympic Games, World and/or European championships and/or prize-winning place;
      • •Alimony;
      • •Property value (income) received on basis of the divorce;
      • •By a natural person: 1) surplus from the sale of accommodation (house) with attached land hereto, being into ownership for more than 2 years; 2) surplus from the sale of the vehicle being into ownership for more than 6 months from the registration of property right; 3) surplus from supply of assets being into ownership for more than 2 years, unless the asset is used before alienation for economic activities; herewith, delivery of them and/or only ownership of securities/share for the purposes of receiving the dividends and interests after 2 years is not considered as the application of assets in economic activity;
      • •Value of the property inherited or received as a gift by I and II class successors during the tax year;
      • •Value of the property received as a gift up to 1000 GEL during the tax year, except the value of the property received as a gift by the employee from the employer;
      • •Value of the property inherited or received as a gift by III and IV class successors up to 150 000 GEL during the tax year;
      • •Money issued for food in compensation of blood donated for an individual (donor);
      • •Until 1 January 2014, income earned by primary delivery of agricultural products produced in Georgia by a natural person employed in agricultural manufacturing, if gross income earned from mentioned delivery by a natural person does not exceed 200 000 GEL during the calendar year;
      • •Surplus received by a natural person (I class successor) from the sale of tangible assets owned by a natural person and decedent/grantor for more than 2 years;
      • •Non-resident’s income from leasing out the property, which is not a non-resident permanent establishment in Georgia;
      • •Income (including benefits) of resident individual not belonging to the income received in Georgia;
      • •Material assistance issued to the employee of the ministry of internal affairs of Georgia or military service mutilated and/or injured in performance of official duties, as well as in case of death to their families (successor);
      • •Profits from the lotteries, the value of which does not exceed 1 000 GEL;
      • •Profits gained from gambling club, gaming machines, as well as organizing betting by persons other than the gains received from organization of gambling in systematic-electronic form;
      • •Value of the property received free of charge from charity organization by family members of the person duly registered in the database of socially unprotected families (who receives a living allowance confirmed by appropriate documentation), the person mutilated for the territorial integrity of Georgia, as well as the person deceased for the territorial integrity;
      • •Benefits gained in a way of transferring the real estate into ownership subject to payment or free of charge by administrative authority (employer) to the employee.

 

How the 2 year period of ownership of the assets is calculated?
      • According to the date making a document identifying property right submitted to the registration body for the purposes of registration of property right;
      • If property is not registered in registration body after arising the property right;

 

Who are I, II, III and IV class successors in granting of property and/or testamentary succession?
      • I class successor – spouse, child adopted child, grandchild, great grandchild, and his/her children, and parent and adoptive parents;
      • II class successor – sister, brother niece, nephew and their children;
      • III class successor – grandmother and grandfather, father and mother of grandmother and grandfather both from mother and father’s side;
      • IV class successor – uncle (mother’s brother and father’s brother), aunt;
What kind of benefits is at taxation of income tax?

Taxable income up to 3000 GEL received by individuals during the calendar year shall not be taxed with income tax:

      • Childhood disabled persons, as well as people with obvious and significant disabilities;
      • Citizens of Georgia participating in the Second world war and in the battles for the territorial integrity of Georgia;<
      • A person awarded the honorary title of “kartlis deda”;
      • Single mothers;
      • A person who adopted a child (within 1 year from adoption);
      • A person adopting the child in foster care;

Simultaneously, income tax to be paid to taxable income up to 3000 GEL during the calendar year will be reduced by 50%:

      • Taxable income received by the person of a large family living in the mountainous region (who has three or more dependents under 18) from his activity in mentioned region;
      • Taxable income received by the person having one or two children living in the mountainous region (who has one or two dependents under 18) from his activity in mentioned region;
How to use the tax privilege?

For the purposes of using the tax privileges, employee submits the employer a certificate about using the privileges issued by the tax authority and a document identifying the privileges. In case of more than one working place, source of payment which should extend credit shall be determined by an employee.

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