Georgia has rapidly developed into an attractive business destination, offering a favorable tax environment, low bureaucracy, and simplified compliance procedures. The ease of company formation in Georgia has drawn attention from foreign investors and entrepreneurs alike. Companies benefit from low tax rates, double taxation treaties, and various business incentives. To take full advantage of these benefits, businesses must understand the structure of corporate taxation and ensure compliance with local regulations. This is where professional support from B2B Hub becomes invaluable.
In this article, we explore Georgia’s tax system for companies, including corporate income tax, VAT, withholding taxes, and special tax regimes. We also highlight compliance requirements and how B2B Hub can support companies in meeting their financial and tax obligations efficiently.
Corporate Income Tax in Georgia
1. Corporate Tax Overview
Georgia follows an Estonian model of corporate taxation, which means that corporate income tax (CIT) is only applied when profits are distributed as dividends. This allows companies to reinvest profits tax-free and encourages business growth.
CIT rate: 15% on distributed profits.
Undistributed profits: No tax until dividends are paid.
Non-deductible expenses: Subject to the 15% CIT even if not directly distributed.
The Estonian model makes company formation in Georgia an appealing option for businesses aiming to grow and reinvest. B2B Hub provides strategic tax planning to help companies manage profit distribution efficiently and minimize CIT liabilities.
2. Value-Added Tax (VAT)
VAT is a key component of Georgia’s tax system, applying to the sale of goods and services within the country.
Standard VAT rate: 18%.
Threshold for VAT registration: Businesses with annual revenue exceeding 100,000 GEL must register for VAT.
Exemptions: Some services, such as education and healthcare, are VAT-exempt.
Companies involved in company formation in Georgia often need to register for VAT depending on their expected revenue. B2B Hub assists companies in handling VAT registration, filing returns, and claiming input VAT efficiently.
Withholding Taxes in Georgia
1. Dividends, Interest, and Royalties
Withholding taxes apply to certain types of income paid to non-residents.
Dividends: 5% withholding tax.
Interest: 5% withholding tax.
Royalties: 10% withholding tax.
However, Georgia’s double taxation treaties (DTTs) can reduce or eliminate withholding taxes on cross-border payments. B2B Hub helps companies navigate DTTs and structure their operations to minimize tax exposure.
2. International Tax Compliance
Georgia’s expanding network of double taxation treaties ensures that companies can operate internationally without the burden of double taxation. Businesses formed under company formation in Georgia can benefit from these treaties, but compliance with both domestic and foreign tax regulations is essential.
B2B Hub offers advisory services to ensure companies remain compliant with international tax obligations while taking advantage of treaty benefits.
Special Tax Regimes for Companies
1. Free Industrial Zones (FIZ)
Georgia offers Free Industrial Zones (FIZs), where companies benefit from significant tax exemptions:
0% CIT on activities conducted within the FIZ.
VAT exemption for goods traded within or exported from the FIZ.
Simplified customs procedures.
Companies operating in a FIZ under company formation in Georgia enjoy a favorable environment for manufacturing and international trade. B2B Hub provides advisory services on setting up operations within these zones.
2. Virtual Zone for IT Companies
Georgia promotes the development of its IT sector through a virtual zone status for IT companies.
0% CIT on income derived from software exports.
Exempt from VAT on IT-related services.
Companies involved in software development or technology services can apply for virtual zone status through company formation in Georgia. B2B Hub offers guidance on eligibility and registration, helping businesses enjoy the tax benefits of this regime.
Compliance and Reporting Obligations
1. Tax Filing and Payment Deadlines
Companies must file their corporate income tax returns annually. VAT returns are filed monthly, and withholding taxes must be reported and paid by the 15th of the following month.
Failure to meet deadlines can result in penalties and interest charges. B2B Hub provides comprehensive tax compliance services, ensuring companies meet all filing deadlines and avoid penalties.
2. Penalties for Non-Compliance
Georgia enforces strict penalties for tax violations, including:
0.05% daily interest on late tax payments.
Fines for non-compliance with filing obligations.
With professional assistance from B2B Hub, companies can mitigate the risk of penalties by ensuring timely and accurate reporting.
Benefits of Company Formation in Georgia
Georgia’s business environment offers several advantages:
Low tax burden: Only 15% CIT on distributed profits, and no tax on reinvested income.
Double taxation treaties: Reduced tax liabilities for international operations.
Favorable special regimes: Access to Free Industrial Zones and virtual zone benefits.
Simplified tax compliance: Straightforward reporting obligations and low administrative overhead.
These advantages make company formation in Georgia an ideal choice for businesses seeking growth and efficiency. B2B Hub plays a critical role in helping companies set up operations, manage taxes, and stay compliant with Georgian regulations.
Georgia offers a highly favorable tax environment for businesses, characterized by low corporate tax rates, attractive special regimes, and a straightforward compliance framework. The Estonian model of taxation allows companies to reinvest profits tax-free, encouraging long-term growth. With the availability of double taxation treaties and Free Industrial Zones, companies can operate efficiently on both local and international levels.
Setting up operations through company formation in Georgia is an excellent way for businesses to benefit from these tax incentives. However, navigating the tax system requires careful planning and professional guidance. B2B Hub offers end-to-end support, from registration and compliance to tax advisory and reporting services.
By partnering with B2B Hub, businesses can ensure that they meet all legal requirements while optimizing their tax strategy. Whether your company operates in a Free Industrial Zone, the IT sector, or another industry, having the right tax partner is crucial for success. With B2B Hub, companies in Georgia can focus on growth, innovation, and expansion, knowing that their financial and tax matters are in expert hands.
B2B Hub offers comprehensive company formation and corporate services in any jurisdiction of your choice. For inquiries, please contact us at +44 086 097 2345, visit our website at b2bhub.ltd, or send us an email at reg@b2bhub.ltd.
Comments