Changes in the taxation of Georgia in 2021
Business conditions in Georgia are getting easier and better every year. Regular legislative updates allow not only citizens of the country, but also non-residents of Georgia to keep their companies.
What changes have been made to Georgia's tax system in 2021 to address the problems caused by the coronavirus pandemic, we will look at in this article.
Automatic VAT refund
The Georgian government has introduced a decree, according to which excess VAT will be returned to the current account of the one who works with the right to offset VAT.
This approach makes life easier for taxpayers, because the tax will be refunded automatically, without additional inquiries or excessive bureaucracy.
Bureaucracy is not common in a country like Georgia. That is why small and medium-sized businesses feel comfortable, even in conditions of COVID-19 restrictions.
New requirements for the payment of VAT in Georgia
New rules for VAT calculation came into force in Georgia at the beginning of 2021. The amount of VAT has not changed and amounts to 18%, while it is obligatory for a taxpayer to register when the level of income exceeds GEL 100,000.
Return value-added tax arises when a resident of Georgia uses the services of a non-resident. It is also 18%.
The territorial system of taxation is still in force. That is, if the services are rendered outside Georgia, they are not subject to VAT.
The innovations concern the determination of the location of the taxation object and this is a direct determinant for whether the services will be taxed with VAT or not.
According to the current legislation:
- services related to real estate are determined by the location where the real estate is located,
- services related to movable property, in the field of culture, education, art or sport, or additional transportation services are determined by the place where they were actually rendered,
- transportation services are determined by the place where transportation begins, except for passenger transportation
- services rendered to those who work under the management of an organization registered abroad, the place of service rendering is determined outside of the country.
Thus, the latter point applies to a whole list of services provided and they are not subject to value added tax. However, those taxpayers, who provide services that are not included in this list, must pay VAT. At the same time, they do not have an opportunity to return it, because they are taxpayers in other states.
The changes in taxation in Georgia in 2021 are beneficial to freelancers, foreign owners of companies that are on the list of current laws.
Learn the laws of Georgia, start your own business in the country that is considered the most affordable place to do business!
The Madloba Directory is happy to help you do just that!
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