TAX in Georgia
Tax in Georgia is one of the most attractive aspects for entrepreneurs, expats, and investors looking to establish themselves in the country that is slowly gaining popularity. Over the past decade, Georgia has worked hard to simplify its tax system, both for locals and foreigners, making it one of the most competitive and transparent in the region. With straightforward procedures, low rates, and business-friendly regulations, Georgia stands out as a destination where paying and managing taxes is both simple and affordable. Whether you are a simple individual wondering ‘How much tax do you pay in Georgia?’ or a business owner considering relocating, and starting business in this country, understanding the structure of taxes in Georgia is definitely an essential step.
Taxes in Georgia
The Georgian tax system is designed to be more transparent and efficient for everyone. This system is regulated by the Georgian Tax Code, which is aligned with international standards. To make things even better, Georgia is also recognized by the World Bank’s Ease of Doing Business Index for its straightforward taxation process. The main types of taxes in Georgia include standard taxes like in other countries, such as income tax, corporate profit tax, value-added tax (VAT), property tax, and excise duties. Georgia does not impose a wealth tax, inheritance tax, or capital gains tax (with some exception cases), which makes it even more appealing for foreigners and investors who are looking to invest in Georgia. For individuals and businesses alike, this simplicity reduces the burden of compliance and creates a favorable environment for economic activity.
Income Tax in Georgia
The income tax in Georgia is remarkably simple compared to other countries. Both residents and non-residents are equally taxed at a flat rate of 20% on their income. This means that individuals pay the same rate regardless of how much they earn. For freelancers, employees, and small business owners, the flat rate is predictable and easy to calculate.
Georgia also offers a small business regime. Entrepreneurs who register under this system can pay as little as 1% tax on turnover up to GEL 500,000 annually. If income exceeds this amount, the tax rises to 3%. This model has encouraged thousands of freelancers, and IT professionals to relocate and register their business in Georgia due to the extremely favorable conditions.
Sales Tax in Georgia
Unlike countries such as the United States, Georgia does not have a general ‘sales tax.’ Instead, Georgia uses VAT (Value-Added Tax) at a flat rate of 18% on most goods and services. So if you are asking ‘What is the sales tax in Georgia?’ we can say that the full answer depends on the context. For general purchases, VAT applies rather than a sales tax. However, there are specific cases where a type of sales tax comes into play, especially in the automobile sector.
Automobile Sales Tax in Georgia
One of the most frequently searched questions is about automobile sales tax in Georgia. Georgia is well known as a hub for used car imports, both for local buyers and for re-export to neighboring countries. When purchasing a car in Georgia, buyers typically pay customs duty, excise tax (depending on engine size, fuel type, and car age), and VAT at 18% if the car is bought from a dealer. So, when people ask about sales tax for cars in Georgia, what they are usually referring to are these combined duties and VAT charges. It is not a flat sales tax like in the U.S., but rather a mix of excise duties and VAT, which can significantly affect the final price of the car.
VAT in Georgia
VAT in Georgia is one of the main sources of government revenue and the current standard VAT rate is 18%, which applies to most goods and services. However, certain sectors are exempt. The excemt cases are education, medical services, and financial transactions. Foreign investors and companies should note that Georgia follows the ‘Estonian Model’ for corporate income tax, which means that companies only pay profit tax (15%) when profits are distributed. Until then, reinvested profits are tax-free, which encourages business growth and reinvestment. This model has been praised globally and is a major reason why Georgia has become such an attractive destination for entrepreneurs.
Property tax in Georgia country is another important consideration for individuals and companies. For individuals, property tax is generally up to 1% of annual income, but only if their income exceeds GEL 40,000 (about €12,500). For companies, property tax is 1% of the average annual value of fixed assets. Foreigners can own property in Georgia (except agricultural land with some restrictions), and they are also subject to property tax under the same rules. This tax system has attracted a large number of foreign buyers interested in apartments, especially in Tbilisi and Batumi. With growing real estate markets, property tax remains relatively affordable compared to European standards.
Tax Check Machine in Georgia
If you’ve ever been to a restaurant or store in Georgia, you’ll notice receipts often come with a QR code or special stamp. This is part of Georgia’s tax check machine system. The government introduced this system to ensure tax transparency and to reduce underreporting of sales. Each transaction is automatically registered with the Revenue Service, making it harder for businesses to evade VAT. For consumers, it also ensures authenticity of the purchase and contributes to a more reliable economy.
FAQ About tax in Georgia
How much is tax in Georgia?
The standard flat income tax in Georgia is 20%. For small businesses, the rate can be as low as 1%. VAT is 18%, and property tax is generally up to 1% and these rates are considered very competitive internationally, which is why many expats and entrepreneurs find Georgia appealing.
Is Georgia sales tax 7%?
We can easily say no. Georgia does not use a U.S.-style ‘sales tax.’ Instead, it applies 18% VAT on most goods and services. The figure of 7% does not apply to the Georgian tax system, but sometimes confusion arises because different countries use different tax structures.