- Individual income tax rate on employment income: 20%
- Individual income tax rate on other income: 5%/20%
- Rate of tax on capital gains: 0%/20%
An individual is considered to be a resident of Georgia if they are present in Georgia for more than 183 days in any continuous 12-month period ending in a tax year, or if the individual was abroad during the tax year in public service of Georgia. An individual also may become a tax resident of Georgia if the individual has high net worth, as defined under the securities market law.
Resident and nonresident individuals are taxable only on Georgia-source income. Dividends and interest received by resident individuals from resident companies are excluded from the taxable base.
The main categories of taxable income include employment income, income from independent activities, including business income (i.e., sole proprietors), dividends, interest, royalties, pensions, rental income, and income from the disposal of property.
Employment income (including benefits) and the income of sole proprietors is taxed at a flat rate of 20%.
Income from renting out residential space to a person solely for residential purposes, and where no deductions are taken from such income, is taxed at 5%.
Dividends and interest are subject to a 5% withholding tax.
Income from the sale of a vehicle or a residential apartment (house) with an attached land plot is taxed at 5%.
There is no separate capital gains tax in Georgia. However, gains derived by individuals from the sale of private property not related to a business activity are not taxable if the property has been held for more than two years. Gains derived from a business activity are included in gross business income and, after relevant deductions, are taxed at a rate of 20%.
Deductions and allowances
Expenses related to business activities are deductible for sole proprietors. There are no personal deductions or allowances for individuals.
Foreign tax relief
Tax paid outside of Georgia may be credited against Georgian tax, but the credit is limited to the tax assessed in Georgia on the income.
Compliance for individuals
A tax return must be submitted by 31 March following the tax year. Tax on employment income is withheld and remitted to the tax authorities by the employer, with the tax return filed monthly. Other income is self- assessed. Income tax payable by a sole proprietor (except for persons with special status) is due in four annual installments. Persons with special status submit tax returns on a monthly basis. For other individual taxpayers, the liability is settled on 31 March of the year following the tax year.
Penalties are imposed for failure to register with the tax authorities, late filing and failure to file a tax return, late payment of tax, and the under-declaration of the tax liability.
A legally binding ruling may be obtained from the tax authorities on the tax consequences of a transaction.
Controlled foreign companies
There is no controlled foreign company legislation.
Foreign exchange control
There generally are no foreign exchange controls and no restrictions on the import or export of capital. Funds may be repatriated in any currency. However, the GEL is the only legal tender in the country. Both residents and nonresidents may hold bank accounts in any currency.