Tax
The Estonian model of corporate tax on distributed profit only
The Tax Code of 2010 imposes corporate income tax at 15 percent, but since 2017 Georgia has applied the Estonian model: profit is taxed only when distributed, so retained and reinvested earnings are untaxed. Personal income tax is a flat 20 percent and VAT is 18 percent.
Key rules
- Jurisdiction — National. Administered by the Revenue Service under the Ministry of Finance.
- Deadline — Monthly corporate income tax returns and payment: by the 15th of the following month
- Deadline — Annual personal income tax return for individuals with declarable income: 1 April
Governing law
- Tax Code of Georgia2010, as amended; Estonian model from 1 January 2017
In practice
The Estonian model is the defining feature: corporate income tax at 15 percent falls only on distributed profit and on defined deemed distributions such as non-business expenses, so a company that reinvests pays nothing. Reporting is monthly rather than annual as a result. Banks, insurers and microfinance organisations were moved onto this basis later than other companies. Small business status offers a 1 percent turnover tax below a revenue threshold, which is heavily used by individual entrepreneurs. Georgia also offers virtual zone status for IT companies exporting services, effectively exempting that income. Disputes go through the Revenue Service dispute board and then the courts.