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Where and How Many – Taxes in Georgia, CIS Space and Worldwide

One of the liberal and attractive systems – this is how international organizations and experts characterize Georgia’s taxation system.

Georgia ranks 6th among 190 countries of the world in the Doing Business rating thanks to low taxes, economic experts say. Under the Tax Code adopted in 2005, only 6 taxes run Georgia, namely: value added tax (18%), income tax (20%),  and profits tax (15%), as well as excise tax, customs duty and property tax. It is worth noting that before the New Tax Code, there were 21 taxes in Georgia.

Starting 2017, Georgia introduced the so-called Estonian model of profits tax, according to which, companies are exempted from profits tax in case of reinvestments.

Different taxation regimes run in free economic zones and there are 3 economic zones in Georgia: Hualing Kutaisi FIZ, Poti FIZ and Tbilisi FIZ. Companies registered in these zones are exempted from profits and excise taxes. The advantage of a free economic zone is that there is zero tax on the so-called corporate tax and there is no requirement for minimum capital.

It is quite easy and convenient for foreign citizens to buy real estate in Georgia. Foreign residents pay no taxes in case of purchasing a house, apartment or residency in Georgia. They are taxed only if they decide to lease the acquired real estate. In this case property owners have to pay 5% of the profits to the state budget.

According to the report by the World Bank (WB) and PWC analysts, Georgia is leader in Post-Soviet and CIS space in terms of low taxes. The total tax rate in Georgia makes up 16.4%. Armenia ranks second in CIS space. Fiscal burden in this country accounts for 19.9%. Kirgizstan ranks third with 29%, Kazakhstan is fourth with 29.2%. The heaviest tax burden among CIS countries is recorded in Belarus (51.8%), Ukraine (52.2%) and Tajikistan (81.8%). Compared to Georgia and Armenia, high tax burden is recorded in Azerbaijan too (39.8%). In all other Post-Soviet countries this indicator is as follows: Russia – 47.1%, Estonia – 49.4%, Lithuania – 42.6%, Latvia – 35.9%, Moldova – 40.2%, Uzbekistan – 41.1%. As to Turkey, its tax rate makes up 40.9%.

It is interesting that the averaged indicator of the total tax rate worldwide makes up 40.8%, including 24.2% in Near East, 35.2% in Central Asia and Eastern Europe, 36.6% in Asia-Oceania, 38.9% in North America, 40.6% in EU, 42.1% in Central America, 46.9% in Africa and 55% in South America.

The world’s highest total tax rate is recorded on Comoro Islands, where the fiscal burden exceeds 216%. High fiscal burden is reported in Argentina too – more than 137%. Bolivia and Eritrea rank third with 83.7%.