The Essence of Corporate Tax Reporting
The declaration of profit tax is the central part of the annual tax reporting of an enterprise: the law determines who, when and how files the declaration, how the amounts are computed and what the consequences of missing a deadline are. The annual income/profit tax declaration is filed by resident individuals whose income is not taxed at the source in Georgia, by enterprises, and by a non-resident individual or a non-resident enterprise without a permanent establishment whose Georgian-source income is not taxed at the source. This page gathers the rules every enterprise should be guided by — from annual and monthly reporting to current payments.
Deadlines and the Filing Procedure
An enterprise submits the annual profit tax declaration to the tax authority by 1 April of the year following the reporting year. Certain categories of taxpayers file a profit tax declaration monthly — no later than the 15th day of the month following the reporting month; this duty covers enterprises taxed with profit tax according to the objects defined by law and the permanent establishment of a non-resident enterprise. Where a salary is paid, an enterprise and an organization file monthly, within the same deadline, a declaration on the salary amounts paid and the tax withheld. In the declaration the total tax liability is computed in whole lari and an amount below 1 lari is reduced to zero; the declaration forms and the rules of electronic filing are determined by the Minister of Finance, and filing is possible in person, by insured postal mail or electronically. The deadline for the annual declaration may be extended by 3 months if the current payments of the declarable period have been paid (or no payment obligation exists) and you apply to the authority in writing before the deadline — the payment deadline does not change.
In special cases the deadlines shorten sharply: an entrepreneur individual who ceases economic activity in Georgia files the declaration within 30 working days and owes no further declarations until the activity is renewed; a person in liquidation notifies the authority of the dissolution in writing within 5 working days of the registration of the start of liquidation and files the declaration within the same period; on the opening of a bankruptcy regime the unfiled declarations are submitted within 15 days of the ruling entering into force, while for the periods after the opening of the regime no income/profit tax declarations are filed. Individuals who receive, by inheritance or gift from third- and fourth-line heirs, property worth 150 000 lari or more during the tax year pay the income tax over 2 calendar years. Note also an important rule: where an enterprise does not submit a declaration, it is considered to have submitted a declaration on the basis of which the tax payable is zero, and a declaration subsequently submitted for the same period is treated as late — which is why planning the reporting calendar in advance is essential. A person not obliged to file may nevertheless submit the declaration voluntarily, with a demand for recalculation and refund of the tax.
Current Payments in Profit Tax
An enterprise whose reporting period is the calendar year pays current payments according to the annual tax of the previous period: no later than 15 May — 25 percent; no later than 15 July — 25 percent; no later than 15 September — 25 percent; no later than 15 December — 25 percent. The paid amounts are credited against the tax for the tax year. Current payments are not paid by a person who had no taxable income or profit in the past year, nor by a person whose micro-business or fixed-tax payer status was cancelled during the current year and who had taxable income in the past year. If the expected taxable income decreases by not less than 50 percent and the authority is notified before the deadline, the payment may be reduced or skipped; otherwise the remaining amount is paid with interest. Where the rate changes compared with the previous tax period, current payments may be made from recalculated amounts of the previous year’s taxable income.
The Consequences of Missing a Deadline
Violation of the deadline for filing a tax declaration leads to a fine: where the delay does not exceed 2 months, the fine is 5 percent of the amount of tax payable on the basis of that declaration; where the delay exceeds 2 months — 10 percent. Where the amount payable on the basis of the declaration is zero, no fine is imposed. For non-payment of current payments the Code’s enforcement measures for collecting tax debt apply.
Frequently Asked Questions
Below are answers to the questions raised most often about corporate reporting.
When is the annual profit tax declaration filed?
By 1 April of the year following the reporting year; certain categories report monthly — by the 15th day of the following month.
What fine threatens a late filing?
Up to 2 months of delay — 5 percent of the tax payable; more than 2 months — 10 percent; for a zero declaration there is no fine.
How are current payments distributed?
Into four equal parts of the previous annual tax — 25 percent on 15 May, 15 July, 15 September and 15 December respectively.
Can the deadline be extended?
Yes — by 3 months, subject to paid current payments and a written application; the payment deadline remains unchanged.
What happens when economic activity ceases?
The declaration is filed within 30 working days, with no further obligation until renewal.
How We Help on Legal.ge
The specialists of Legal.ge will fully manage your profit tax reporting: we prepare annual and monthly declarations, verify the schedule of current payments, plan extensions of deadlines and organize reporting on cessation or reorganization. Contact us — properly organized reporting spares you fines and interest.