Income Tax Treaty between the United States and Georgia

 

United States-Georgia Tax Treaty

Georgia International Tax Compliance Rules

Quick Summary.  Situated in Eurasia’s Caucasus region bordering the Black Sea to the West and Russia to the North, Georgia is a parliamentary democratic republic with a president as its head of state.

Following the 2003 Rose Revolution, Georgia introduced a series of democratic and economic reforms in pursuit of pro-Western foreign policies.

Effective 2017, Georgia moved to a new corporate income tax regime, adopting an Estonian model.  Notably, the regime adopts deferral principles, deferring taxation of retained profits until distribution.  Certain entities/industries remain subject to the old corporate income tax regime.  Resident companies/entities are subject to income tax on worldwide income.  Non-resident entities or businesses are subject to tax on Georgian-source income to the extent they carry out economic activities through a permanent establishment located in Georgia.

Resident individuals are only taxed on income that is Georgian sourced.  The Georgian income tax is imposed at a flat rate of 20%.

Georgia is a member of the United Nations and the Council of Europe.

U.S-Georgia Tax Treaty

Georgia Treaty.  Convention between the United States of America and the Union of Soviet Socialist Republics on Matters of Taxation

Currency.  Georgian Lari (GEL).

Common Legal Entities.  Joint stock company, limited liability company, general and limited partnership, cooperative, and sole proprietorship.

Tax Authorities. Revenue Service of the Ministry of Finance.

Tax Treaties. Over 50 tax treaties. The OECD multilateral instrument entered into force on July 1, 2019.

Corporate Income Tax Rate15%.

Individual Tax Rate. 20%.

Corporate Capital Gains Tax Rate15%.

Individual Capital Gains Tax Rate0%/20%.

Corporate residency.  A company is generally considered resident if it is registered in Georgia.

Individual residency. An individual is considered resident if he or she is present in Georgia for more than 183 days in any continuous 12-month period in a tax year. Additionally, an individual may become a tax resident if he or she has a high net worth.

Withholding Tax. Resident companies are not subject to withholding tax.

            Dividends.  5%.

            Interest.  5%/15%.

            Royalties.  5-20%.

            Commissions.  4-20%.

Transfer Pricing.  Five pricing methods are recognized for evaluating whether prices are on arm’s length terms: the comparable uncontrolled price; resale price; cost plus; net profit margin; and profit split methods.

Tax authorities can compare conditions of transactions between related persons and allocate income and expenses that would have applied had the transactions been between independent persons.

CFC Rules.  There is no controlled foreign company legislation.

Hybrid Treatment.  There is no specific anti-hybrid legislation.

Inheritance/estate tax.  Taxed as income, with rebates depending on the distance of the relative.

Tax Treaty Network – International Tax Attorneys

Our international tax expertise allows us to guide clients through tax planning and compliance so that they can focus on what matters most. At Freeman Law, our clients are engaged in an interconnected business environment that spans across the globe.  From supply chains to markets, cross-country taxation impacts every global business.

Do you have questions about Georgia’s Tax Treaties? Schedule a free consultation with one of Freeman Laws International Tax Experts Today!