Corporate Income Tax System in Georgia
Georgia's corporate income tax system is designed to generate revenue for the government while fostering economic growth and investment. The tax is levied on the net income of corporations, with a focus on ensuring fairness and transparency in the taxation process.
Calculation of Corporate Income Tax
The calculation of corporate income tax in Georgia involves several steps:
- Determination of Taxable Income: The taxable income is calculated by starting with the company's accounting income and making adjustments based on tax laws and regulations. These adjustments may include adding back non-deductible expenses or subtracting tax-exempt income.
- Application of Tax Rate: Once the taxable income is determined, the applicable tax rate is applied. Georgia has a flat corporate income tax rate of 15%.
Taxable Income
Taxable income for corporations in Georgia includes all income derived from business activities, such as:
- Sales revenue
- Interest income
- Dividend income
- Rental income
- Capital gains
Exemptions
Certain types of income are exempt from corporate income tax in Georgia, including:
- Dividends received from other Georgian companies
- Income from the sale of agricultural products
- Income from the export of goods and services
Legal Framework
The legal framework governing corporate income tax in Georgia is primarily based on the Tax Code of Georgia. The Tax Code provides detailed provisions on tax rates, taxable income, exemptions, and other aspects of the corporate income tax system.
Objectives of the Corporate Income Tax System
The corporate income tax system in Georgia aims to achieve several objectives:
- Revenue Generation: The tax is a significant source of revenue for the government, contributing to the funding of public services and infrastructure.
- Fairness and Equity: The flat tax rate ensures that all corporations are taxed at the same rate, regardless of their size or industry.
- Economic Growth: The tax system is designed to encourage investment and economic growth by providing incentives for businesses to operate in Georgia.
Conclusion
Georgia's corporate income tax system is a well-structured and transparent system that balances the need for revenue generation with the promotion of economic growth. The flat tax rate and clear definition of taxable income provide certainty and predictability for businesses operating in Georgia.
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