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Corporate Tax Filing

Do I pay corporate tax if I reinvest all my profits?

Under Georgia's "Estonian Model," you generally do not pay Corporate Income Tax (CIT) on retained or reinvested profits. If you keep the money within the company to buy assets, pay salaries, or expand operations, the tax rate is 0%. The tax obligation arises only when you distribute profits (e.g., pay dividends) or incur expenses unrelated to economic activity.

What is the total tax rate on dividends for foreign shareholders?

When distributing dividends, the company pays 15% Corporate Income Tax on the grossed-up amount of the distribution. Additionally, there is a 5% Dividend Tax withheld at the source. This applies to both local and foreign shareholders. However, Double Taxation Treaties (DTA) might reduce the 5% withholding tax rate for residents of certain countries.

Are business lunches and corporate parties deductible?

These fall under "Representative Expenses." They are not deductible in the traditional sense but are exempt from taxation up to a specific limit (1% of the previous year's revenue or expenses). Any amount spent above this cap is treated as distributed profit and is taxed at 15%. Proper documentation (invoices, guest lists) is required to prove the business nature of the expense.

Do I need to file a declaration if the company had no activity?

Yes, active companies usually must file a monthly tax declaration even if it is "zero" (no taxable transactions). Failure to file can result in automatic penalties. If you plan to be inactive for a long time, you can apply to the Revenue Service to pause your tax filing status, but until that is granted, monthly filing is mandatory.

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Corporate tax filing and payment are the cornerstones of financial management for any business. Georgia operates under the "Estonian Model," which entails taxing distributed profit (15%). While seemingly simple, this model contains many nuances, ignorance of which can lead to tax errors. Specifically, taxation applies not only to dividend distribution but also to "non-economic expenses," "gratuitous supplies," and "representative expenses" above a certain threshold. Correct filing requires classifying each transaction for tax purposes. An incorrectly filled declaration leads to penalties and interest, while overpayment reduces company liquidity.

Our service covers the full cycle of corporate tax filing and consultation. Specialists offer:

  • Preparation and submission of monthly profit tax declarations on RS.ge;
  • Identification of taxable operations (dividends, issued loans, non-economic expenses);
  • Verifying the correctness of applying tax incentives (e.g., Free Industrial Zone, IT Zone);
  • Calculating profit tax for permanent establishments of foreign enterprises;
  • Administering taxes withheld at source;
  • Reviewing and correcting declarations from previous periods.
This service ensures your company is fully compliant with tax legislation.

Corporate tax filing is essential in specific scenarios. For example, a company issued a loan to a partner or subsidiary. This operation might be considered profit distribution and taxed if it does not meet specific criteria. Another example is corporate party expenses — these are representative expenses taxable only if they exceed the limit. Also, when distributing dividends, it is crucial to correctly declare not just profit tax (15%) but also dividend tax (5%). Errors in this process directly affect the company's financial standing.

The legal framework relies on Articles 96-102 of the "Tax Code of Georgia," regulating profit tax. The specifics of the "Estonian Model" require declaring distributed profit monthly (no later than the 15th of the following month), rather than actual profit. Ministry of Finance instructions on expense classification are also important. A lawyer and accountant work together to ensure declaration accuracy.

The process begins with processing accounting data at the end of the month. The specialist checks all expenditures and determines which are subject to taxation. The declaration is filled out electronically on the RS.ge portal. Data is double-checked before submission. With the help of a specialist on Legal.ge, you avoid technical and substantive errors, ensuring smooth business operations.

Legal.ge is a platform giving you access to qualified tax specialists. Correct filing is not just an obligation; it is part of financial discipline. Manage your taxes efficiently with Legal.ge.

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