When issued loan/paid advances is fully or partially returned (in proportion of returned amount). When compensation is received from supply of shares or transfer of right of claim. When compensation is received as a result of supply of debt securities. #Georgia 2020 tax tables code
Specifically, the Georgian tax code sets that companies have the right to credit the CIT paid previously in the following cases: That said, the tax law requires taxation of such cash outflow, which may be embodied with profit distribution, though in turn it allows one to claim back the paid CIT when the cash is returned. The main purpose of the listed taxable objects is to mitigate hidden distribution of profit without taxation.
Loss incurred from waiving the claim receivable from such entities. Loss derived as a result of transferring the right of claim to such entities. Acquisition of debt claim towards such persons. Payment of contractual penalties and fines to such persons. Purchase of debt securities issued by such persons. Granting of a loan to a natural person or a non-resident.Ĭertain transaction with persons registered in the countries with preferential tax regimes are also subject to immediate taxation of CIT. Payments for acquisition of shares/interest of a non-resident enterprise or contributions made in the capital of a non-resident enterprise. 24%).Ĭertain transactions are deemed as non-business expenses, which, inter alia, include: The interest paid for a credit (loan) above the annual interest rate established by the Minister of Finance of Georgia (i.e. Expenses, the purpose of which is not to gain profit, income, or compensation. Costs incurred not related to economic activityĬosts not related to economic activity shall be: A PE shall be allotted a profit it might have gained as an independent enterprise conducting the same or similar activity and being in the same or similar conditions. Costs incurred not related to economic activity.ĭistributed profit encompasses distribution of profits by an enterprise to its partner as a dividend in a monetary or non-monetary form.ĭistribution of dividends between Georgian legal entities and distribution of dividends received from a foreign enterprise (except for a person registered in a country with preferential tax treatment) are not subject to CIT.ĭistributed profit of a PE of a non-resident enterprise shall be a deemed distribution of profits attributable to the PE for its activities. Consequently, taxpayers no longer need to determine taxable gross income and allowable deductions in order to arrive at the taxable profits, but rather a standard CIT rate of 15% is applicable to the grossed-up value of the following transactions: The new regime is not aimed to exempt the profits from taxation but is designed to defer the taxation moment. As such, retained profits are no longer taxable until they are distributed. 
The new system represents the adoption of the Estonian model of CIT to the Georgian tax system. New CIT systemįrom 1 January 2017, Georgia has switched to a new CIT system. Non-resident enterprises earning income from Georgian sources, other than through a PE, are subject to withholding taxes (WHTs) ( see the Withholding taxes section for more information). Non-resident enterprises carrying out economic activities in Georgia through a permanent establishment (PE) are subject to CIT with respect to its Georgian-source income.Ī 20% CIT rate applies to commercial banks, credit unions, microfinance organisations, and loan providers from 1 January 2023.
Resident enterprises are subject to corporate income tax (CIT) on worldwide income.
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