Who is considered a taxable person for VAT purposes?

Any person who independently carries out any kind of economic activity, regardless of its purpose or result. The supply of a non-residential building is always treated as economic activity.

Which amount triggers the registration duty?

The threshold of 100 000 lari in total operations over any continuous 12 calendar months; the application is due no later than 2 working days from the day of exceeding.

When is input VAT on purchased goods deductible?

Where the goods or services are used for a taxable operation; VAT on domestic acquisitions, on import, and charged under the reverse-charge method is deductible.

What conditions apply to a VAT refund?

The amount deductible in the reporting period must exceed the amount assessed; for grant-funded acquisitions, the supporting document must be submitted within 3 months.

VAT Advisory in Tbilisi, Georgia

The Legal Foundations of VAT Regulation

Every practical question of value added tax in Georgia rests on precise norms of the Tax Code: the taxable person is defined in Article 158, the taxable amount in Article 164, registration and its cancellation in Articles 165, 165-1 and 165-2, the right of deduction in Article 175, and the refund of the tax in Article 181. Sound advisory work applies these norms together to a concrete business model, because a single transaction is often assessed across several articles, and an error at any stage turns into tax risk.

The Taxable Person and Economic Activity

Under Article 158, a taxable person is any person who independently carries out any kind of economic activity in any place, regardless of its purpose and result. Economic activity includes operations of persons supplying goods or providing services, apart from one-off or irregular activities, and the use of property for deriving regular income. The supply of a non-residential building is in any case treated as economic activity. Conversely, the activity of a state or municipal organ acting as a state organ is not economic activity, although the Code carves out spheres where this exception does not apply, such as telecommunications, the supply of water, gas, electricity or heat energy, transport, port and airport services, warehousing, advertising, public catering, and radio and television broadcasting.

Formation of the Taxable Amount

Article 164 provides that the taxable amount is the consideration received or receivable for the supply of goods or services, without VAT, including a subsidy directly linked to the price — a rule embracing barter as well. It must include taxes, fees and charges other than VAT, and incidental costs — commission, packaging, transport and insurance — passed on to the purchaser. It excludes discounts for advance payment, concessions received by the moment of supply, reimbursement of expenses incurred in the purchaser's name, and penalties for breach of contract. For a multi-purpose voucher, the taxable amount is the consideration paid for it; where that is unknown, the value indicated is divided by 1.18. Between related parties, in defined cases, the taxable amount is the market price without VAT.

VAT Advisory