Statutory reporting for companies in the Republic of Georgia
Make sure to be compliant and file your financial reporting timely
June 5th 2023
In Georgia, active businesses, including legal entities, individual entrepreneurs, small businesses, and individual taxpayers, are required to fulfill tax reporting obligations by submitting annual and/or monthly tax declarations. Additionally, certain types of businesses are also required to submit annual financial reports as part of their statutory reporting requirements. This article aims to provide a concise explanation of these reporting obligations and highlight key details regarding tax reporting compliance in Georgia.
Reporting frequence in the Republic of Georgia
The frequency for filing and submitting tax returns in Georgia differs per taxes; it is either monthly or annually.
Please find the overview here below:
Tax Type - Reporting frequence
Withholding tax on wages - Monthly
Withholding tax on dividends - Monthly
Withholding tax on interest - Monthly
Withholding tax on royalties - Monthly
Withholding tax on service fees - Monthly
Small Business (1%) - Monthly
VAT - Monthly
Reverse VAT - Monthly
Corporate Income tax - Monthly
Property tax of individuals - Annually
Property tax of legal entities - Annually
Ordinary personal income tax - Annually
Please find the overview here below:
Tax Type - Reporting frequence
Withholding tax on wages - Monthly
Withholding tax on dividends - Monthly
Withholding tax on interest - Monthly
Withholding tax on royalties - Monthly
Withholding tax on service fees - Monthly
Small Business (1%) - Monthly
VAT - Monthly
Reverse VAT - Monthly
Corporate Income tax - Monthly
Property tax of individuals - Annually
Property tax of legal entities - Annually
Ordinary personal income tax - Annually
Elaborated deadlines
Typically, in Georgia, when the tax reporting period is monthly, businesses are required to submit their tax declarations and make tax payments by the 15th of the following month.
For instance, if the reporting month for VAT declaration is February 2023, the tax declaration and VAT payment are due by March 15th, 2023. In the event that the 15th falls on a holiday or weekend, the deadline is shifted to the next working day.
However, there is an exception for withholding tax declarations, which apply to taxes withheld from wages, dividends, interest, royalties, and service fees.
In these cases, the tax payment should be made on the same day that the payment is made, and the tax declaration should be submitted by the 15th of the following month.
For example, if your company pays salaries to employees on the 25th of each month, the withholding tax on those salaries should also be transferred to the budget on the same day. However, you can submit the tax return before the 15th of the next month.
As for annual declarations, the payment due date and submission of tax declarations are generally set before April 1st of the year following the reporting year, except for property tax for individuals.
For instance, an annual tax declaration for personal income tax in 2022 should be submitted before April 1st, 2023.
Annual tax returns for property tax of legal entities in 2022 should also be submitted no later than April 1st, 2023.
It is worth noting that in the case of annual tax declarations, such as property tax for companies, an advance payment system may apply, but detailed discussion of this topic is beyond the scope of this article.
For instance, if the reporting month for VAT declaration is February 2023, the tax declaration and VAT payment are due by March 15th, 2023. In the event that the 15th falls on a holiday or weekend, the deadline is shifted to the next working day.
However, there is an exception for withholding tax declarations, which apply to taxes withheld from wages, dividends, interest, royalties, and service fees.
In these cases, the tax payment should be made on the same day that the payment is made, and the tax declaration should be submitted by the 15th of the following month.
For example, if your company pays salaries to employees on the 25th of each month, the withholding tax on those salaries should also be transferred to the budget on the same day. However, you can submit the tax return before the 15th of the next month.
As for annual declarations, the payment due date and submission of tax declarations are generally set before April 1st of the year following the reporting year, except for property tax for individuals.
For instance, an annual tax declaration for personal income tax in 2022 should be submitted before April 1st, 2023.
Annual tax returns for property tax of legal entities in 2022 should also be submitted no later than April 1st, 2023.
It is worth noting that in the case of annual tax declarations, such as property tax for companies, an advance payment system may apply, but detailed discussion of this topic is beyond the scope of this article.
Consequences of failed submissions?
Penalties of up to 50% of the principle amount of unpaid taxes, plus an interest of 0.05% of the unpaid due tax per each day of overdue payment can be applied, if a taxable event took place in your Georgian business during the reporting period, and you did not file the relevant tax declaration, or did not fully report your taxes.
As a general rule, it is highly recommended to file your tax reports even if no taxable events occurred.
Submit zero tax reports or unmark on the taxpayer’s information card
According to Georgian tax law, if you have marked a specific tax filing on your taxpayer’s information card and did not submit this (even empty) before the due date, you will receive a 100 GEL penalty for each month not submitted.
Same penalty applies if you haven't marked a specific declaration on the information card, before the end of a reporting period while you have submitted such tax declaration in same reporting period.
For example, if until the end of May 2023 you haven't marked withholding tax declaration on your taxpayer’s information card, but have submitted the declaration until 15th June 2023. In this case you might also receive 100 Gel penalty.
Further examples:
You have registered a sole proprietorship in Georgia which isn't a VAT payer and taxable events (e.g., payment of wages) only took place 3-4 months per year. In 2022, the only taxable events took place in May, July, and October when you paid salary to yourself and paid taxes accordingly.
You are an individual entrepreneur in Georgia with the Small Business status and paying 1% tax on your income. In 2022, you issued invoices, received income only in the months of April, June, August, and November.
In both examples your business is active, and you must mark at least one or two tax declarations on your information card on www.rs.ge
To maintain tax reporting compliance in months when your business is non-active, there are two options. You must either submit zero tax returns or deselect the declaration on your information card before the end of the reporting month for which you do not plan to submit any declaration.
Failure to take above action may result in penalties. Typically, a penalty of 100 GEL per month is imposed for incorrect reporting, in addition to any regular penalties that may attract the attention of the Georgian Revenue Service (GRS). This could potentially lead to a tax inspection.
It is important to note that the GRS began enforcing 100 GEL penalties from the end of the previous year, whereas previously, they used to issue warnings to taxpayers.
As a general rule, it is highly recommended to file your tax reports even if no taxable events occurred.
Submit zero tax reports or unmark on the taxpayer’s information card
According to Georgian tax law, if you have marked a specific tax filing on your taxpayer’s information card and did not submit this (even empty) before the due date, you will receive a 100 GEL penalty for each month not submitted.
Same penalty applies if you haven't marked a specific declaration on the information card, before the end of a reporting period while you have submitted such tax declaration in same reporting period.
For example, if until the end of May 2023 you haven't marked withholding tax declaration on your taxpayer’s information card, but have submitted the declaration until 15th June 2023. In this case you might also receive 100 Gel penalty.
Further examples:
You have registered a sole proprietorship in Georgia which isn't a VAT payer and taxable events (e.g., payment of wages) only took place 3-4 months per year. In 2022, the only taxable events took place in May, July, and October when you paid salary to yourself and paid taxes accordingly.
You are an individual entrepreneur in Georgia with the Small Business status and paying 1% tax on your income. In 2022, you issued invoices, received income only in the months of April, June, August, and November.
In both examples your business is active, and you must mark at least one or two tax declarations on your information card on www.rs.ge
To maintain tax reporting compliance in months when your business is non-active, there are two options. You must either submit zero tax returns or deselect the declaration on your information card before the end of the reporting month for which you do not plan to submit any declaration.
Failure to take above action may result in penalties. Typically, a penalty of 100 GEL per month is imposed for incorrect reporting, in addition to any regular penalties that may attract the attention of the Georgian Revenue Service (GRS). This could potentially lead to a tax inspection.
It is important to note that the GRS began enforcing 100 GEL penalties from the end of the previous year, whereas previously, they used to issue warnings to taxpayers.
Enhanced Reporting Obligations for VAT-Registered Businesses in Georgia
Businesses that have registered as VAT payers in Georgia face additional reporting requirements beyond the general obligations outlined previously. On a monthly basis, they are expected to submit at least three tax declarations: a withholding tax declaration, a corporate income tax declaration, and a VAT declaration.
In the near future, I will delve into a separate article discussing the repercussions when a VAT payer in Georgia fails to submit a zero VAT declaration each month, even if there were no applicable VAT taxable transactions.
In the near future, I will delve into a separate article discussing the repercussions when a VAT payer in Georgia fails to submit a zero VAT declaration each month, even if there were no applicable VAT taxable transactions.
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