Who Pays Profit Tax and What Is Taxed
Taxpayers of profit tax are a resident enterprise and a non-resident enterprise that carries on activity in Georgia through a permanent establishment or receives income from a source in Georgia, as established by Article 96. The taxable object of a resident enterprise is distributed profit, an expense or other payment not connected with economic activity, gratuitous supply of goods or services, and representative expenses above the established limit. This means that undistributed profit remains in the business, and planning therefore rests on choosing the moment of distribution. Non-cash payments become taxable at market price — without value added tax where the market price includes it.
A separate rule applies to an organization carrying on economic activity: its taxable objects are an expense or payment not connected with the activity or not arising from the organization’s purpose — including one not connected with charitable activity or not arising from the purpose of a grant agreement — as well as gratuitous transfers and representative expenses above the limit. For a non-resident’s permanent establishment, the object is determined by the expenses and costs arising from the activity of that establishment.