Peculiarities of calculating income taxes in Georgia, taxes on the rental of real estate in Georgia
Find out all about how income taxes are calculated for individuals and legal entities in Georgia! In this article you will find a detailed description that will help you easily understand all the features of tax assessment, including when renting real estate in Georgia. Right now, follow the link and get acquainted with income taxes in Georgia!
Number of taxes in Georgia it decreased sharply after the amendments to the Tax Code. The government's policy on taxes has led to the fact that today Georgia is in the top ten countries for doing business.
In 2022, there are only 6 types of taxes in Georgia, one of which is the corporate income tax. Due to low tax rates, foreign entrepreneurs are eager to open a business in Georgia.
In this article we will talk about what is the income tax for organizations in Georgia, as well as what taxes you need to pay when renting out real estate.
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Features of income tax in Georgia
Every legal entity in Georgia is obliged to pay income tax. Profit is considered to be the income of the organization after deducting other tax charges. Also, the profit of the organization is its taxable base.
Expenses that are not deducted from total income are indicated in the legislation of the country. These are usually depreciation, employee salaries, or transportation costs.
In Georgia, the base is taxed at 15%, while reinvestments are not taken into account. Both residents and non-residents countries are required to pay taxes if their activities involve receiving income from a source.
There are no differences in the calculation of taxes for foreign citizens. But there are different taxes for individuals and legal entities in Georgia.
Peculiarities of calculating income tax for individuals in Georgia
Individuals in Georgia pay a tax of 15% when withdrawing profits, or 5% on dividends. These fees are not specified in the declaration, but are required to be paid in the following cases:
- when selling real estate;
- when receiving dividends from Georgian organizations;
- when receiving remuneration as an author or royalties from the franchise.
It is worth considering that some income is not taxed under any circumstances:
- donation;
- receiving alimony or division of property in case of divorce;
- winnings;
- social benefits.
Features of income tax calculation for legal entities in Georgia
For entrepreneurs, a profit tax of 15% is provided, but for micro and small businesses it will be only 1%. The amount of tax in Georgia for all companies depends on the amount of annual income.
Individual entrepreneurs in Georgia, with an annual profit of more than 500,000 GEL, do not have the right to count on a reduced percentage of the tax rate. However, reinvested profits are not taxed according to the Estonian taxation model.
This approach of the Georgian government allows entrepreneurs, including foreign ones, not to pay income tax at all, subject to certain conditions.
Features of accrual of income tax on rental property in Georgia
Georgia provides for a tax on rental of real estate. At the same time, if this is a residential premises, then the owner is obliged to pay 5% of the profit received. If the premises are commercial, then all 20%.
The Government of Georgia aims to reduce this type of tax so that owners rent out housing more often, and at the same time reduce the price. All this should ensure the influx of tourists and investors into the country.
An excellent investment is considered to be the purchase of an apartment in the tourist areas of Georgia. For foreign citizens, this is a great way to earn passive income. The legislation of Georgia is loyal to such entrepreneurship, as evidenced by the simplified procedure for acquiring real estate in Georgia, as well as the clear taxation system in the country.
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