Georgia: Georgia to amend corporate tax rules

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Georgia: Georgia to amend corporate tax rules

Pushkaryova

Anna Pushkaryova

The Ministry of Finance of Georgia has recently initiated important changes in the system of corporate income taxation, particularly related to the moment of taxation itself.

The draft law "On introducing amendments to the Tax Code of Georgia" dated February 12 2016 (the Draft Law) abolishes the taxation of corporate income at the moment of earning the profit and, instead, introduces the taxation of corporate profit at the moment of its distribution. Accordingly, the tax on corporate income is being replaced with the tax on profit distribution. At the same time, income reinvested into the business activities of taxpayer becomes exempt from taxation.

Additionally, the Draft Law introduces the following novelties:

  • New methodology of determining the tax base by means of dividing the amount of distributed profits by a coefficient of 0.85;

  • Reporting period set at 1 (one) calendar month;

  • Income which is subject to taxation under the new rules will include the following: profit distributed to shareholders in a monetary and non-monetary form (with certain exceptions); free-of-charge supply; expenses which do not relate to business activities; granting of a loan to an individual; payments made for a purchase of debt securities or a stake in an entity located in a tax heaven; expenses for business representation purposes which exceed the threshold defined by the Tax Code.

It is worth noting that the novelties introduced by the Draft Law do not apply to banks, insurance companies, microfinance organisations, pawnshops and non-profit organisations.

The Draft Law, if adopted, will become effective for tax periods starting from July 1 2016.

Anna Pushkaryova (anna.pushkaryova@eurofast.eu)

Eurofast Georgia

Tel: +995 595 100 517

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

If the Reform leader becomes UK prime minister then he may follow the direction of the US in at least one significant way
Trump declared a new national emergency in issuing the order; in other news, Grant Thornton Germany is up for sale and the subject of interest from both its UK and US counterparts
The judgment, which saw Denmark's Supreme Court rely on OECD TP guidance, sets aside more than 15 years of consistent administrative practice, experts have told ITR
Belgium’s new coalition government has gone ahead with a new exit tax regime that could land it in the courts
Brazil’s government has not officially framed the bill as a countermeasure amid trade tensions with the US, but the move is being considered as part of Brazil’s strategic response, one expert tells ITR
Understanding India’s income tax landscape can help charities ensure compliance, optimise tax benefits, and enhance their impact, writes Raghav Bajaj of Khaitan & Co
Tax advisers in Brazil are rising above the country’s notoriously complex tax system to deliver high-quality advisory services, ITR’s exclusive in-house data reveals
ITR’s data has highlighted the US firm’s ambition to become America’s ‘premier’ tax player via a concerted partner recruitment strategy
Jaap Zwaan’s arrival continues a recent streak of A&M Tax investing in the region; in other news, the US and Japan struck a deal that significantly lowered tariff rates
In a world where international tax concepts rely on human activity, Leonard Wagenaar poses existential questions about the future of such ideas when AI is ever-present
Gift this article