Tax rate by region Georgia

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Georgia implemented a Value Added Tax (VAT) system in 2000 to modernize its tax administration and improve revenue collection. This system applies to all goods and services sold within the country, including SaaS products. The standard VAT rate in Georgia is 18%, making it crucial for businesses to understand their compliance obligations to avoid any penalties or fines. While Georgia does not have any specific exemptions for digital goods and services, some specific categories of products or services may be subject to a reduced VAT rate of 0.0%.

Georgia

Georgia implemented a VAT system in 2000 to modernize its tax administration and improve revenue collection.

Official government link: Revenue Service

18.00%

E-products and services VAT/Sales tax rate

0.00%

Reduced tax rate

Reduced tax rate product categories

Digital services are generally subjected to the standard VAT rate of 18%. There are currently no specific reduced rates for digital goods and services.

Exempted product categories

Georgia does not have any specific exemptions for digital goods and services.

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

A non-resident company must register when providing taxable supplies in Georgia.

Online registration possible

Yes

Local representative needed

Yes

Registration procedure

In order to register, it is necessary to complete a specific form called “Registration form of a foreign taxpayer” available on the Georgian Revenue Service’s website.

The form requires certain details about your company, such as:

– The country where the company is incorporated for tax purposes;
– The code and description of the company’s activities;
– The tax identification number of the country where the company is established.

Once you have filled out and submitted this form, the Georgian Tax Service will provide instructions to registered digital companies on how to proceed with VAT report submissions.

List of digital and electronic services liable for tax

Online services such as website and webpage hosting, remote maintenance of programs, systems administration, and data warehousing. It also covers the supply of on-demand disc space, software downloads and updates, banner ad blockers, drivers, and automated installations of filters and firewalls. Additionally, it includes accessing or downloading desktop themes, images, screensavers, digitized books, online publications, newspapers, journals, weblogs, and website statistics. Other services are online news, traffic, weather reports, real-time financial data, advertising space, search engines, music, jingles, ringtones, films, games, automated online games, and streaming radio or TV programs on demand.

Penalties

If you don’t meet the deadline set by Georgia’s tax laws for submitting your tax return or tax calculation, penalties apply. Here’s how it works:

If you’re up to 2 months late, you’ll be fined 5% of the tax due based on your return. However, the total fine for the entire delay period can’t exceed 30% of the tax due.
If you’re more than 2 months late, the fine increases to 10% of the tax due based on your return or tax calculation.
If your tax return or tax calculation shows that you owe no tax (zero), then no fine is imposed under this rule.

Registration threshold

No threshold specified

Filing interval

Monthly

Filing deadline

The 15th day of the month following the reporting period.

E-invoicing requirements

Not specified

Record keeping

Maintain your accounting records for a period of three years following the end of the year in which the service was provided. This is necessary to verify the correctness of your tax liability.

Effortless Subscription Management and Billing

Businesses operating in Georgia are required to file VAT returns monthly and submit payment by the 15th day of the following month. Maintaining accurate accounting records for at least three years after the end of the year in which the service was provided is essential to ensure compliance and verify tax liability. While e-invoicing is not explicitly mandated by Georgian legislation, adopting this practice can streamline your record-keeping and data management processes. To navigate the complexities of SaaS VAT compliance in Georgia, it is highly recommended to consult with a tax professional. They can provide expert guidance on your specific situation and ensure your business meets all regulatory requirements.

A crucial factor influencing your SaaS VAT obligations in Georgia is the location of your customers. If you provide services to customers within Georgia, you are generally required to charge the standard VAT rate of 18%. However, if your customers are located outside of Georgia but within the European Union (EU), you may need to consider the reverse charge mechanism. In this scenario, your customer is responsible for accounting for VAT and paying it directly to the tax authorities in their country. Staying informed about the latest VAT regulations and adapting your approach based on customer location is vital to ensuring compliant and efficient business operations in Georgia.

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