Corporate Income Tax in Georgia: 15% on Distributed Profit

Your Georgian company can hold profit for years without paying tax on it. The tax arrives when money leaves: a dividend, a payment that does not serve the business, something given away free, entertainment spending above the limit. This guide sets out the 15% rate, the gross-up that decides the real cost, the payments that count as distributions, and how the monthly return works.

The Estonian model: tax on distributed profit

Georgia taxes a resident company on what it pays out, not on what it earns. Article 97 of the Tax Code sets 4 taxable objects: distributed profit, expenses and payments not related to economic activity, free supplies of goods, services and money, and entertainment costs above the statutory limit.

Profit that stays in the company is not on that list. Retain it, put it into stock, equipment or hiring, and it carries no charge however long it sits there. The passage of time never creates the object. A payment does.

A resident company here means a Georgian enterprise, one whose place of business or place of management is in Georgia. Either test on its own is enough.

The 15% rate and the 0.85 gross-up

The rate is 15%, but it is not 15% of the cheque you write. The taxable amount is the payment divided by 0.85, which puts the tax on top of the net figure rather than inside it. Set against the payment itself, that 15% works out at 17.65%.

Say your company pays a net dividend of GEL 85,000. Divide by 0.85 and the taxable amount is GEL 100,000. Profit tax at 15% is GEL 15,000, and GEL 100,000 leaves the company in total.

Then comes a second layer. The company also withholds 5% when it pays dividends to individual shareholders, and for a Georgian tax resident that withholding is the end of the tax: the dividend is final and is not added to gross income.

On the GEL 85,000 dividend, GEL 4,250 is withheld and GEL 80,750 reaches the shareholder. Total tax is GEL 19,250, which is 19.25% of the GEL 100,000 that left the company.

One payment escapes both layers. A dividend to another Georgian company is not distributed profit at the paying company and is not taxed at source or counted in the recipient's gross income, so profit can move up a group untouched. The exceptions are a recipient that is an individual enterprise and a recipient already exempt from profit tax.

What triggers the tax: the 4 taxable objects

Distributed profit

A dividend is any income a shareholder takes from their shares as a result of a profit distribution, whether or not it is in proportion to the holding. A payment on liquidation or a share buy-back is not a dividend up to the partner's paid-in capital contribution, and neither is a payment made by handing over shares in the same company.

Dividends your company received from a foreign company and then passes on are not distributed profit either. The exception is a dividend from a company registered in a preferential tax country, meaning a country whose law charges a company's profit at no more than one third of the Georgian rate, so 5% or less. Redistribute that one and 15% applies. For working out which dividend has been passed on, the first amount the company distributes is treated as the dividend it received.

Expenses and payments not related to economic activity

This is the object that catches owners out. An expense the Code requires you to document and you cannot document is not connected with economic activity, and neither is an expense whose purpose is not to obtain profit, income or compensation. An owner's personal spending settled by the company sits squarely there.

The Code then names specific payments and taxes them whether or not they look like spending:

• Interest paid on a credit or loan above the annual rate the Minister of Finance sets.
• A loan given to an individual or to a non-resident, other than buying a debt security listed on a recognised foreign stock exchange.
• Cash placed on a bank account as security for a loan taken by a partner who is an individual or a non-resident.
• Advances, loans, contractual penalties and purchases of debt securities where the other side is registered in a preferential tax country or is exempt from profit tax.
• A capital contribution to a non-resident or to an exempt person, and buying their shares, unless those shares are placed on a recognised foreign stock exchange.
• The cost of goods or services bought from a micro business holder, unless that person's income is taxed under the general rules or a waybill or a tax document was issued.

Banks, credit unions, microfinance organisations and loan providers are outside the loan rules in that list. Where a taxed payment is reversed the tax comes back: when a taxed loan is repaid, or an advance is repaid or the goods and services arrive, the company credits and reclaims the profit tax it paid, in the reporting period of the repayment.

Free supplies of goods, services and money

Giving goods, services or money away free of charge is a taxable object in its own right. Where a payment caught by any of these objects is made in non-monetary form, the taxable object is the market price of the goods supplied or services rendered, and where that market price includes VAT, the price without it.

Entertainment costs above the limit

Only the excess is taxed, never the whole spend. The limit for a calendar year is 1% of the income received in the previous calendar year, or, where the expenses incurred that year were greater than the income, 1% of those expenses. In the year the company was founded the limit is 1% of the expenses incurred up to the end of that year.

Entertainment expense has a defined meaning: events held in the company's name, including presentations and receptions with drinks and meals, excursions and cultural events, buying souvenirs, and guest services such as consular services, airport meeting and seeing off, transport and hotel services.

Which companies pay, and at what rate

Every resident company is inside the distributed profit model, and so is a non-resident company operating here through a permanent establishment. For that establishment the taxable object is the payments and expenses arising from its activity, including money paid out of its profit to the head office, at the same 15% on the same 0.85 base.

Owning a company registered abroad while you live in Georgia raises a separate question, which is whether that company is Georgian for tax purposes because of where it is managed from.

The 1% small business rate is not an option for a company. It belongs to an entrepreneur natural person, which is why the choice between an individual entrepreneur and an LLC settles which tax system you are in before anything else does.

The 2 zero-rated statuses behave differently once you look past the headline. A virtual zone person gets the profit tax exemption and nothing else: salaries it pays are taxed at the general 20%, and the 5% withholding still applies to a dividend it pays an individual. The Code's dividend exemptions cover free industrial zone enterprises, the state, agricultural cooperatives, banks and gambling operators, and not virtual zone persons. A free industrial zone enterprise does have that exemption, but pays 4% of the income received when it supplies goods to a Georgian person outside the zone, and 4% of the market price when it buys goods from one.

How corporate tax reporting works

The reporting period is the calendar month. Your company files a profit tax return no later than the 15th of the month following the reporting month, and pays by the same date, because the Code sets no separate payment date for profit tax.

There is no annual profit tax return on top of that. A company taxed on these objects is expressly excluded from the annual income and profit tax return due by 31 March, and the quarterly current payments of 25% due on 15 May, 15 July, 15 September and 15 December belong to enterprises whose reporting period is the calendar year, which yours is not.

The 5% withheld on a dividend runs on a parallel track. The paying company is the tax agent, it transfers the withheld tax to the budget at the moment the dividend is paid, and it declares that payment on a monthly return due by the 15th of the following month. Salary withholding uses the same cycle, so a month with staff and a dividend produces filings on one date. Where the 15th falls on a Saturday, a Sunday or a public holiday the deadline runs to the end of the next working day, the rule that moves every filing date in the Georgian tax year.

Miss the return and the fine is 5% of the tax due on it where it is up to 2 months late, and 10% after that. Where the tax due under the return is zero, no late filing fine applies. Late payment is charged separately, at 0.05% per day on the unpaid tax, and the day of payment counts as an overdue day.

The Revenue Service can audit a period for 3 years, counted from the end of the calendar year being audited, so a month in 2026 stays open until the end of 2029. Keep your tax source documents at least 3 years after the end of the year they belong to, because an expense you cannot document turns into a taxable object of its own.

Other taxes a Georgian company pays

Profit tax of zero does not buy a quiet month. A Georgian company is a tax agent for other people's tax, and 7 further charges apply whatever it does with its profit.

The GEL 100,000 test runs on any 12 consecutive calendar months rather than the calendar year, and VAT is due from the transaction that takes the total over the threshold, including that transaction itself, so registering for VAT becomes a 2 business day job the moment it happens.

Buying services from abroad brings a charge of its own. Where a supplier not established in Georgia supplies services here, the customer accounts for the tax, and reverse charge VAT on foreign services is owed whether or not your company is registered for VAT. A registered company declares and credits it in the same monthly VAT return; an unregistered one pays it by the 15th of the following month and gets no credit at all.

Pension contributions are the line foreign owners misread. The scheme under the Law on Funded Pensions covers Georgian citizens and foreign citizens who hold a permanent residence permit, so a foreign director without one is outside it and the 2% each way never arises.

Salary or dividend: what taking money out costs

Both routes are open to an owner who works in the company, and they are taxed differently. Salary for work actually done is not a profit tax object: it is absent from the list of unconnected expenses, and it is taxed at source as employment income at 20%, the flat rate that personal income tax in Georgia applies unless the Code sets another. A dividend is a distribution, so it goes through the gross-up.

The GEL 750 gap is not what decides it. Pay that is off market can still be reassessed, because an operation with an interdependent person who is not taxed on the profit tax objects is treated as a distribution of profit to the extent the price differs from the market price and the interdependence affected the result. A director's salary of GEL 300,000 in a company with one client invites exactly that adjustment.

A non-resident shareholder with no permanent establishment here has the same 5% withheld on a dividend, and 20% on salary for work done in Georgia. A lower rate may be available: Georgia has double tax treaties in force with 58 countries and territories on the double tax treaty list of the Ministry of Finance, and under Order No 633 the paying company applies the treaty rate at the moment it pays, then files Form No 1 with the shareholder's residency certificate before 1 April of the following year. Withhold the full Georgian rate instead and the money comes back only on a refund claim the shareholder makes, not the company.

Legal ways to lower corporate income tax

There is no clever structure to reach for. Every lever is already in the rules above, and each one is a decision you make before the payment, not after it.

• Keep the profit in the company. No object arises while it stays there, so deciding when to pay tax is the same decision as deciding when to pay yourself.
• Document every business expense. What you cannot document is charged at 15% on the grossed-up amount, and the documents have to survive 3 years past the end of the year they belong to.
• Check the entertainment limit in November, not in January. The ceiling is 1% of last year's income and only the excess is taxed, so the figure that matters is one you can already calculate.
• Price dealings with owners and related companies at market value. Where the parties are interdependent, the difference is treated as a distribution of profit.
• Choose the extraction route on purpose. Salary at 20% of the gross and a dividend at 19.25% of the money leaving the company are both available, every month rather than once a year.

If you are about to pay a dividend, lend money to a shareholder or change how you pay yourself, send us the transaction and David Sisvadze, who spent 6 years inside the Revenue Service of Georgia, will set out the tax in a written opinion he signs.

For a large or unusual payout there is also a formal route to certainty. An advance tax ruling from the tax authority on the treatment of a specific transaction costs GEL 10,000, or GEL 5,000 where the applicant is a resident individual, and Government Resolution No 251 doubles both fees for requests filed from 1 January 2027. The ruling is issued within 90 calendar days.

Frequently asked questions

What is the corporate income tax rate in Georgia?

15%, charged on distributed profit and on 3 other taxable objects, and calculated on the payment divided by 0.85. Banking institutions, credit unions, microfinance organisations and loan providers pay 20%, and so do slot machine halls and online games of chance.

Is retained profit taxed in Georgia?

No. Profit kept in the company is not one of the taxable objects, so it carries no profit tax however long it stays there. The charge arises on the payment out, not on the earning of the profit.

How do you calculate profit tax on a dividend in Georgia?

Divide the net dividend by 0.85, then take 15% of the result. A net dividend of GEL 85,000 gives a taxable amount of GEL 100,000 and profit tax of GEL 15,000, which is 17.65% of the GEL 85,000 paid out.

What is the total tax on a dividend from a Georgian LLC?

19.25% of the money leaving the company, where the shareholder is an individual. The company pays 15% on the grossed-up amount and withholds 5% from the dividend itself, so GEL 100,000 out of the company becomes GEL 80,750 in the shareholder's hands.

Does a Georgian company file a profit tax return every month?

Yes. The reporting period is the calendar month, the return is due no later than the 15th of the following month, and the tax is paid by the same date. There is no annual profit tax return and no quarterly advance payment.

Can a Georgian LLC use the 1% small business tax?

No. Small business status and its 1% rate are available only to an entrepreneur natural person, so a company cannot hold it whatever it trades in.

Do banks pay a higher rate of profit tax in Georgia?

Yes, 20% rather than 15%, covering banking institutions, credit unions, microfinance organisations and loan providers. Dividends they pay out of 2023 and later profits are not taxed at source, so the 5% second layer falls away.

What happens if a company pays an owner's personal expenses?

It is taxed like a distribution. A payment whose purpose is not to obtain profit, income or compensation is an expense not related to economic activity, so 15% falls on the amount divided by 0.85 even though no dividend was ever declared.

Are dividends between Georgian companies taxed?

No, on either side. A dividend paid to another Georgian company is not distributed profit at the paying company, and it is not taxed at source or included in the recipient's gross income. The exceptions are a recipient that is an individual enterprise and a recipient already exempt from profit tax.