VAT registration is one of the most crucial procedures in the Georgian tax system, directly impacting a business's cash flow and liabilities. Under Georgian law, VAT registration can be either mandatory or voluntary. Mandatory registration is triggered when the total amount of VAT-taxable transactions within any continuous 12-month period exceeds 100,000 GEL. Identifying the exact moment this threshold is crossed is critical, as late registration leads to significant fines and penalties. Voluntary registration is often a strategic decision—for example, when a company wishes to claim input VAT credit (especially beneficial for importers or exporters) or when its primary clients are VAT payers themselves.
What Does VAT Registration Service Cover?
Specialists on Legal.ge ensure full management of the registration process and subsequent support. The service includes:
- Turnover Analysis: Reviewing company financial data to determine if and exactly when the 100,000 GEL threshold was crossed.
- Electronic Registration: Preparing and submitting the application on the Revenue Service portal (RS.ge), ensuring all fields are correctly filled.
- Tax Consultation: Informing the client about the rights and obligations of a VAT payer (filing deadlines, credit rules).
- Accounting System Setup: Adjusting VAT accounting parameters in the bookkeeping software from the moment of registration.
- Reverse Charge Issues: Explaining VAT registration specifics when dealing with non-residents (reverse charge VAT liability can arise even without registration).
Common Situations and Scenarios
In practice, mistakes regarding registration timing are common. For instance, an entrepreneur might think the 100,000 GEL threshold is calculated based on the calendar year (January-December). In reality, the law considers "any continuous 12 months" (e.g., from March to the following February). Ignoring this nuance leads to automatic penalties. A second scenario involves "related parties": if an individual owns several LLCs engaged in similar activities, the tax authority may aggregate their turnovers and impose VAT registration retroactively. A third scenario involves importers who register voluntarily immediately upon starting operations to claim input VAT paid at customs and avoid losing those funds.
Georgian Legal Framework
VAT registration is regulated by Articles 156 and 165 of the Tax Code of Georgia. Article 165 sets the conditions for mandatory registration: a person is obliged to apply for registration to the tax authority no later than 2 working days from the moment the total amount of taxable transactions exceeds 100,000 GEL. The registration date is considered the following day. Also important is the Minister of Finance's Decree "On Tax Administration," which defines technical registration procedures.
Step-by-Step Service Process
When hiring a specialist on Legal.ge, the first step is checking "Turnover History." The specialist calculates revenue for the last 12 months. If the obligation has arisen, an electronic application is immediately filed on RS.ge. If registration is voluntary, the specialist analyzes whether this move is profitable (e.g., if clients are individuals, VAT increases the price and reduces competitiveness). After registration is complete, the specialist sets up the electronic invoicing service and conducts a brief training on filing.
Why Choose Legal.ge?
Missing the VAT registration moment is a costly mistake for businesses. Legal.ge gives you access to qualified accountants and tax consultants who will constantly monitor your turnover and timely alert you to the necessity of registration. Experts on our platform will help you make an informed decision about voluntary registration and avoid tax risks.
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