Corporate Income Tax in Georgia: The Model Explained
Since 1 January 2017, Georgia has applied a corporate profit taxation system inspired by the Estonian model, often cited as one of the most business-friendly in the world. Here is how it works in detail.
The Fundamental Principle: Taxation Only Upon Distribution
In the new CIT model, reinvested profits are not taxed. Tax only applies when financial flows 'exit' the company. Specifically, taxable items include:
• Dividends distributed (to natural persons, non-residents, non-profit organisations, or CIT-exempt entities)
• Expenses unrelated to economic activity (undocumented expenses, representation expenses exceeding legal limits, etc.)
• Payments unrelated to economic activity (repayment of loan principal to natural persons or non-residents, advances to offshore entities, etc.)
• Gratuitous deliveries and gifts
• Differences between contractual price and market price in transactions with related parties or entities in preferential tax jurisdictions
Tax Rates
The standard CIT rate is 15%. Technically, the rate of 15%/85% applies to the taxable amount: if a company distributes 85,000 GEL in dividends, the CIT will be 85,000 / 0.85 × 15% = 15,000 GEL.
Exceptions:
• Banks, credit unions, microfinance organisations, and lenders: 20% (since 1 January 2023)
• International companies (IT and maritime services): 5%
• Electronic gambling operators: rate raised to 20% in 2025 (with withholding tax exemption on dividends distributed from these profits)
Who Is Subject to the New Model?
All companies with legal form, except commercial banks, insurance companies, microfinance organisations, credit unions, pawnbrokers, oil and gas companies (for activities covered by the pre-1998 oil and gas law), and systematic electronic bookmakers.
These exceptions fall under the classic CIT model, in which tax is calculated annually on adjusted accounting profit.
Old Model: Key Rules
For entities subject to the old model (essentially the financial sector), the standard rate is 15% (20% for banks). Returns are filed before 1 April following the tax year, with quarterly advance payments (25% × 4 = 100% of the previous year's CIT, due on 15 May, 15 July, 15 September, and 15 December).
Deductions: all costs incurred to produce taxable income are deductible, subject to certain limits:
• Representation costs: capped at 1% of gross turnover
• Interest: limited to the annual rate set by the Minister of Finance
• Charitable donations: capped at 10% of net taxable profit
Depreciation: tangible fixed assets are depreciated on a declining balance basis across 5 groups (rates of 5% to 20%); intangible assets are depreciated on a straight-line basis over their useful life.
Losses: carried forward for 5 years (10 years upon request).
Transfer pricing: Georgia follows OECD principles for cross-border transactions between related parties or with entities in tax havens. An advance pricing agreement can be concluded with the administration.
Tax treaties: Georgia has signed more than 56 double taxation agreements (see the guide's annex for country-by-country details). Non-residents may request refunds of taxes wrongly withheld at source.
Filing Frequency
• New model: monthly return, to be filed before the 15th of the following month
• Old model: annual return, to be filed before 1 April
Practical Benefits for Investors
The Estonian model offers significant operational advantages: cash available for reinvestment, no complex annual CIT calculation, fewer annual returns to prepare. Combined with the variety of free zones and special regimes, this system makes Georgia one of the most competitive corporate tax environments in Europe and Central Asia.