According to the Doing Business Report commissioned by the World Bank,Georgia ranks 9th in the world in 2018 by ease of doing business. Moreover, Georgia is a country with the fourth smallest tax burden in the world, according to the Tax Misery Index Ranking by the Forbes Magazine, which is perfect rating for developing country.
The Government of Georgia is dedicated to a fair and transparent tax environment, protection of business interests and reliable tax administration system which is collected on both state and local levels here.
The country has only six taxes of which five (personal income tax, corporate income tax, Value added tax, excise tax and import tax) are on the national level and one – property tax is a local tax. Personal income tax, dividend and royalty is 5% and the most important, the country doesn’t have payroll, social security, capital gains, wealth or inheritance tax.
According to the Economic Liberty Act, Government is not allowed to increase national tax rates (except excise tax) or number of taxes without national referendum.
As for the individuals who are just starting economic activities in Georgia, they are required to register with the GTA prior to their start-up and obtain a Tax ID. Georgian citizen non-entrepreneur individuals may use a Personal ID and foreign citizen non-entrepreneur individuals have to register with the GTA prior to filing their annual personal income tax returns and obtain a Tax ID.
According to Tax Code of Georgia, if a company produces goods intended for export market, it can apply for a license about “Internal Processing Regime” to the Ministry of Finance. This license will grant the company a right to import raw materials without paying import/customs tax and VAT on these materials.
Furthermore, the Tax Code of Georgia gives an opportunity to the companies to use accelerated depreciation on capital assets (including full deduction during first year) and loss carry forward for corporate profit tax purposes (10 years).
Nowadays, Georgia has Double Taxation Avoidance Treaties with 52 countries and there’s no restrictions on currency convertibility or repatriation of capital and profit.
According to Global Corruption Barometer of Transparency International, 0% of interviewed reported paying bribe to the tax administration and World Economic Forum’s Global Competitiveness Report named Georgia among low tax rate countries, this information with all the above-mentioned data emphasize the simplicity and reliability of Georgian tax system for any interested person.
Author: Tamar Devdariani © BUSINESS GEORGIA