Georgia · Guide
Georgia does not tax company profit when it is earned. It taxes it when it leaves the company. The headline is "15% on distributed profit", and it is true, but two details change the arithmetic: the 15% is applied to a grossed-up amount, and money can "leave" in ways that are not dividends.
This guide reads the Tax Code article by article: what is taxed, at what rate, how the gross-up works, which payments are treated as distributions, and what the special regimes actually exempt.
The model: tax on distribution, not on earnings
Since 2017, Georgia has used the distribution model pioneered by Estonia. Article 97(1) of the Tax Code lists four taxable objects for a resident company.
- Distributed profit, in money or in kind.
- Expenses or payments not related to the economic activity.
- Goods or services supplied, or funds transferred, free of charge.
- Representation expenses above the limit set by the Code.
Profit that stays in the company and is spent on the business is not on the list. A company that reinvests everything pays no profit tax, whatever it earns.
The 15%, and why it is really 17.65%
Article 98(1) sets the rate at 15%. Article 97(10) sets the base: the amount paid out is divided by 0.85 before the rate applies.
The effect is simple once written down.
| Step | Amount |
|---|---|
| Net dividend the company wants to pay | GEL 85,000 |
| Grossed-up base (85,000 / 0.85) | GEL 100,000 |
| Profit tax at 15% of the base | GEL 15,000 |
| Tax as a share of the net dividend | 17.65% |
| Withholding on the dividend at 5% | GEL 4,250 |
| What a foreign shareholder receives, before treaty relief | GEL 80,750 |
Two practical points follow.
- Dividends between Georgian companies are not taxed at source and are not distributed profit for the payer (Articles 98-1(2)(c) and 130(2)). A Georgian holding above a Georgian operating company adds no layer.
- A resident individual who receives a dividend taxed at source owes nothing more in Georgia (Article 130(3)).
Tax estimate
How much tax could you save?Three questions, then the yearly difference between your current rate and three jurisdictions.
Deemed distributions: where the tax actually comes from
The rate rarely surprises anyone. The base does. Article 98-1 treats several transactions as distributions even if no dividend is declared.
- Related-party transactions off market price. A service bought from an affiliate above market, or sold to one below, is taxed on the difference (Article 98-1(4)(a)).
- Controlled transactions that fail the arm's length test, adjusted under the transfer pricing chapter (Article 98-1(4)(b)).
- Transactions with tax-exempt persons off market price (Article 98-1(4)(c)).
- Costs with no business purpose, or undocumented where documentation is required (Article 98-2).
| Habit | How the Code sees it |
|---|---|
| Owner's personal expenses paid by the company | Expense not related to economic activity, taxed |
| Management fee to the owner's foreign company above market | Deemed distribution on the excess |
| Interest-free loan to the owner, never repaid | Risk of being treated as a distribution |
| Free services to a sister company | Free supply, taxed |
| Hotel and dinners above the representation limit | Taxed on the excess |
For a Georgian subsidiary of a foreign group, transfer pricing is where audits concentrate.
What is not a distribution
Article 98-1(2) carves out payments that look like dividends but are not taxed.
- Return of capital on liquidation or buy-back, up to what the shareholder contributed.
- Dividends paid to a Georgian company other than an individual enterprise.
- Redistribution of a dividend received from a foreign company, unless that company sits in a country with preferential tax treatment (Article 98-1(2)(e)).
The third line matters for holding structures: a Georgian company can receive dividends from a foreign subsidiary and pass them on without Georgian profit tax, provided the subsidiary is not in a listed low-tax country.
Who is outside the distribution model
- Banks, credit unions, microfinance organisations and lenders are taxed on annual profit at 20% (Articles 97(12) and 98(4)).
- Gambling operators have specific bases and rates of 5% or 20%.
- A Georgian branch of a foreign company is taxed when the parent "takes away" the profit allotted to it, valued as if the branch were independent (Article 98-1(3)).
The special regimes, as the Code writes them
- 1Do you develop IT and supply it outside Georgia?Virtual zone status may exempt that profit
- 2Is your activity on the Government's international company list?5% profit tax, 0% dividend withholding, 5% on salaries
- 3Will you operate inside a free industrial zone?Profit from permitted activities exempt
- 4None of the aboveStandard 15% on distribution
| Regime | What the Code grants | Condition |
|---|---|---|
| Virtual zone | Profit from supplying IT developed by the company outside Georgia is exempt | Legal person in IT holding the status (Articles 8(35), 99(1)(p)) |
| International company | Profit tax 5% with base divided by 0.95; dividends not taxed at source; employees' salary tax 5% | Status granted by the Government for activities it lists; income solely from those activities; not in a free zone (Article 23) |
| Free industrial zone | Profit from activities permitted in the zone exempt; dividends from a zone enterprise not taxed at source | Registered in a zone (Articles 99(1)(m), 130(7)) |
Is the virtual zone still available?
Some founders hear that the virtual zone was abolished. The consolidated Tax Code of 15 October 2026 still defines a virtual zone person and still exempts profit from IT supplied outside Georgia. What the exemption does not do is make the whole company tax-free: income from Georgian clients, or from activities other than developing IT, stays in the standard regime. Choosing between the two IT regimes is a question of activity mix, substance and payroll.
The international company, in numbers
On the same GEL 100,000 of profit, the international company pays profit tax of about GEL 5,000 (5% of a base divided by 0.95) and no withholding on the dividend. Employees' salaries are taxed at 5% instead of the standard rate. The price is a narrow list of eligible activities, set by the Government, and the obligation to earn income solely from them.
How this fits with the rest
- VAT at 18% is a separate tax with its own threshold, covered in the compliance guide.
- What a foreign shareholder pays at home on the dividend depends on the treaty and home rules, covered in the tax guide for non-residents.
- The individual entrepreneur's 1% is a different regime for natural persons, explained in the company types guide.
The bottom line
A Georgian company pays nothing while it reinvests. When it distributes, it pays 15% of a grossed-up base, which is 17.65% of the dividend, and the dividend carries 5% withholding for individuals and foreign shareholders. The tax that surprises founders comes from deemed distributions: personal expenses, related-party prices and free supplies. The special regimes are real but narrow, and none of them is a general low-tax status.
corpsec sets up the company and its registered office; for regime eligibility and transfer pricing, work with a Georgian tax adviser. See the Georgia formation service, or read how the payout is taxed for a non-resident.
Frequently asked questions
What is the corporate tax rate in Georgia?
15%, charged when profit is distributed or treated as distributed, under Article 98 of the Tax Code. Banks, credit unions, microfinance organisations and lenders pay 20% on annual profit instead.
Is it really 15%?
On the statutory base, yes. Because the amount paid out is divided by 0.85 before the rate applies, the tax equals 17.65% of the net dividend paid.
Does a Georgian company pay tax on retained profit?
No. Profit kept in the company and used for the business is not a taxable object. Tax arises on distribution, on expenses unrelated to the business, on free supplies and on representation costs above the limit.
What is the dividend withholding tax in Georgia?
5% on dividends paid to individuals, non-commercial entities and foreign companies. Dividends between Georgian companies are not taxed at source, and international companies' dividends are exempt.
Is the Georgian virtual zone still available in 2026?
The Tax Code consolidated on 15 October 2026 still exempts profit earned from supplying IT developed by a virtual zone company outside Georgia. It does not exempt income from Georgian clients or from other activities.
What is an international company in Georgia?
A Georgian company granted the status by the Government for activities on its list. It pays 5% profit tax on a base divided by 0.95, its dividends are not taxed at source, and its employees' salaries are taxed at 5%.
What counts as a deemed distribution in Georgia?
Mainly transactions with related parties at non-market prices, controlled transactions that fail the arm's length test, and expenses with no business purpose. They are taxed as if profit had been distributed.
Sources
- Tax Code of Georgia, Articles 96 to 98-1, consolidated version of 15 October 2026: taxable objects, the 15% rate, the 20% rate for lenders, the division by 0.85, and deemed distributions
- Tax Code of Georgia, Article 23: international company status, 5% profit tax with division by 0.95, dividends not taxed at source, 5% tax on employees' salaries
- Tax Code of Georgia, Article 99(1)(m) and (p) and Article 130: free industrial zone and virtual zone exemptions, 5% withholding on dividends
- Andersen Georgia, Special tax regime guide: overview of preferential tax statuses in practice
Official, read on 26 October 2026 in the English consolidated text of the Tax Code of Georgia published on matsne.gov.ge (version of 15 October 2026): Articles 8(35), 23, 96, 97, 98, 98-1, 99 and 130. The arithmetic of the effective rate (15 divided by 85) follows from Article 97(10). Not covered by the Code and set by Government ordinance: the list of activities that qualify for international company status and the procedure to obtain virtual zone status, which change over time and must be checked with the Revenue Service. Market reading only: the practical conditions of each regime described by agencies. English translations on matsne are indicative and the Georgian text prevails. This is not legal or tax advice.