Payroll Tax Compliance is a comprehensive service ensuring a company's full adherence to Georgian tax and pension legislation. Unlike simple tax withholding, this service focuses on the broader administrative and regulatory scope: correct and timely filing of declarations, managing data on the RS.ge portal, interacting with the Pension Agency, and constant monitoring of legislative changes. For companies with a diverse workforce (locals, expats, contractors), maintaining compliance is critical to reducing the risk of fines and audits.
The Payroll Tax Compliance service covers the following key areas:
- Monthly Reporting: Preparing and submitting income tax returns to the Revenue Service, detailing each employee's income.
- Pension Scheme Management: Registering employees in the pension system, administering contributions, and declaring them on the Pension Agency portal.
- Employment vs. Service Contract Analysis: Distinguishing the tax status of contractors (Service Agreement) and employees (Employment Contract) to avoid misclassification risks.
- Annual Information Returns: Reporting information on payments made that are not taxed at the source but are subject to reporting requirements.
- Tax Audit Support: Protecting interests and presenting documentation in case of an audit related to payroll taxes.
Compliance violations often occur unintentionally. For example, a company hires a freelancer, pays them a monthly fee, grants leave, and provides equipment. Upon tax audit, this relationship may be reclassified as employment, triggering retrospective income tax and pension contribution liabilities plus penalties. Another common mistake is ignoring the obligation to enroll permanent resident foreigners in the pension scheme. A third case: over-reimbursing business trip expenses beyond statutory norms, which should be taxed as salary. This service serves precisely to prevent such systemic errors.
In Georgia, this field is regulated by the Tax Code of Georgia and the Organic Law Labor Code of Georgia, as well as the Law on Funded Pensions. It is important to know that the Tax Code provides for strict penalties for late filing of declarations or understatement of tax. Additionally, Order No. 999 of the Minister of Finance of Georgia regulates tax administration procedures. Compliance specialists constantly monitor these regulations and ensure the conformity of company processes.
The process involves auditing the company's existing payroll system and rectifying gaps. Specialists create a calendar for filing returns, implement internal control mechanisms, and ensure the synchronization of HR and accounting data. They also prepare payroll reports for management (GL files, Payroll journals), which simplifies financial accounting.
The Payroll Tax Compliance experts featured on Legal.ge are experienced accountants and tax lawyers. They serve both small businesses and large international corporations. With their help, you can be confident that your company fully meets legal requirements and is protected from tax risks. Find a reliable partner on Legal.ge and run your business with peace of mind.
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