Withholding tax at source on salaries is the employer's — the tax agent's — everyday obligation, regulated in detail by the Georgian Tax Code. A tax agent is equated to a taxpayer: under the Code, a taxpayer is a person obliged to pay a tax established by the Code, while a tax agent is a person who, in the case and by the procedure established by the Code, must perform the taxpayer's tax obligation. This equation means that it is the payer — the employer — who answers for un-withheld tax, which makes precise management of the withholding process part of every organisation's financial discipline. The procedure becomes routine only when it is documented. Documentation is what an inspection later reads.
Who Must Withhold at Source
Under Article 154 of the Tax Code, withholding at source is the duty of a tax agent — a legal person, enterprise, organisation or entrepreneur natural person. In particular, the agent is a person paying salary to an employee, a pension (except one paid through the state social security system), a scholarship (except a state scholarship), and, for a resident enterprise, dividends, interest, and royalties to a natural person. An agent is also an enterprise or entrepreneur reimbursing a natural person for the value of services rendered (one not registered as an individual entrepreneur, subject to exceptions), and a person transferring property free of charge to a natural person — except property worth up to 1000 GEL per tax year. Equivalent norms cover organisers of gambling paying winnings to natural persons. An exception is salary paid by a non-resident to an employee where the expense is not attributable to the non-resident's permanent establishment — in that case the employee may perform the obligation personally. The personal route is an exception and must be justified. Justification is filed together with the payment.
The Procedure of Withholding and Transfer
The withheld tax must be transferred to the budget at the same time as the payment to the person, and for a benefit in non-monetary form — by the last day of the corresponding month. On payment of a salary, the recipient natural person must, on request, be given a certificate indicating the amount and type of income and the withheld tax. Information for the tax authority — the recipient's registration number, amounts of income and the total withheld tax — must be submitted no later than the 15th of the month following the month of withholding, and the declaration on expenditures is submitted within the same deadline. If the tax was not withheld, the payer must pay the un-withheld amount to the budget in accordance with the compensation actually paid, together with related sanctions, although the recipient may pay the amount in the payer's name. The moment of payment is fixed documentary.
Liability for Failure to Submit Information
The Tax Code establishes separate fines for the failure to submit, late submission or incorrect submission of monthly information. Where such a defect caused an excessive refund within the untaxed minimum or an excessive credit in the tax obligation, the person bearing the obligation is fined double the excessively refunded or credited amount, unless the information was submitted before the refund decision. Failure to submit information on employed persons to the registry of employed persons entails a fine of 200 GEL per each employed person. These published limits show that breaching information obligations costs no less than a defect in the withholding itself. The moment of discovery is likewise fixed in writing.
Frequently Asked Questions
Salary-related questions most often concern deadlines, certificates and liability. Short answers are collected below. Each answer is aimed at practical application rather than theory.
When does the employer transfer the withheld tax?
At the same time as the payment to the person, and for a non-monetary benefit — by the last day of the month. Information goes to the tax authority by the 15th of the following month. The calendar of deadlines structures the whole tax reporting. Reminders are set a few days before the deadline.
What happens if the tax is not withheld?
The payer must pay the un-withheld tax to the budget in accordance with the compensation actually paid, plus related sanctions. The recipient may pay the amount in the payer's name. The moment of payment is fixed documentary.
What fines threaten for missing information?
A fine of double the excessively refunded amount for defects in reporting information, and 200 GEL per employed person for defects in the registry of employed persons. The registry is verified before each reporting period. Verification closes before the deadline, not on it.
How We Help on Legal.ge
The Legal.ge team checks withholding-at-source processes in every detail: the agent's status, deadlines, certificates and penalty risks. Get qualified assistance with streamlining tax accounting and resolving disputes on Legal.ge. The completeness of information decides the quality of reporting. Each figure in the report traces back to a primary document.