Specific Taxes in Georgia
Beyond corporate and personal income taxes, Georgia levies a diverse range of specific taxes that contribute to its fiscal landscape. These taxes encompass various aspects of economic activity and individual wealth, serving specific purposes and policy objectives.
Value-Added Tax (VAT)
VAT is a consumption tax imposed on the sale of goods and services. It is a comprehensive tax that applies to most business transactions, with a standard rate of 18%. However, certain essential goods and services, such as food and healthcare, are subject to reduced rates of 5% and 9%. VAT is collected by businesses and remitted to the government, acting as a significant source of revenue for the state.
Property Tax
Property tax is an annual levy imposed on the ownership of real estate. The tax is based on the assessed value of the property, which considers factors such as location, size, and amenities. Property tax is a major source of revenue for local governments, contributing to the funding of essential services like infrastructure, education, and public safety.
Excise Taxes
Excise taxes are levied on specific goods and services, such as alcohol, tobacco, and fuel. These taxes are intended to discourage consumption of harmful substances, generate revenue, and protect domestic industries. Excise taxes are typically included in the price of the goods or services and passed on to consumers.
Environmental Taxes
Georgia imposes environmental taxes on activities that have a negative impact on the environment. These taxes aim to internalize the costs of environmental degradation and encourage sustainable practices. Examples include taxes on air pollution, water pollution, and waste disposal. Revenue from environmental taxes is often earmarked for environmental protection measures and conservation efforts.
Stamp Duty
Stamp duty is a tax levied on legal documents and transactions, such as property transfers, share transfers, and contracts. The tax is calculated based on the value of the transaction and varies depending on the type of document. Stamp duty generates revenue for the government and helps regulate certain economic activities.
Inheritance Tax
Inheritance tax is levied on the transfer of property or assets from a deceased person to their heirs. The tax is calculated based on the value of the inheritance and the relationship between the deceased and the beneficiary. Inheritance tax aims to redistribute wealth and generate revenue for the government.
Taxpayers Subject to Specific Taxes
The specific taxes in Georgia apply to a wide range of taxpayers, including individuals, businesses, and organizations.
- VAT: Businesses engaged in the supply of goods and services are liable for VAT, with certain exemptions for specific transactions.
- Property Tax: Property owners, including individuals, companies, and trusts, are subject to property tax.
- Excise Taxes: Manufacturers, distributors, and retailers of excisable goods and services are responsible for paying excise taxes.
- Environmental Taxes: Companies and individuals engaged in activities with environmental impacts, such as manufacturing, waste disposal, and energy production, are subject to environmental taxes.
- Stamp Duty: Parties involved in transactions subject to stamp duty, such as property buyers, shareholders, and parties to contracts, are liable for the tax.
- Inheritance Tax: Beneficiaries who inherit property or assets from a deceased person are subject to inheritance tax.
Purpose and Rationale
The specific taxes in Georgia serve various purposes and policy objectives:
- VAT: VAT generates revenue for government expenditure and public services. It also promotes economic growth and fiscal stability.
- Property Tax: Property tax contributes to local government budgets and infrastructure development. It also helps regulate property ownership and discourage speculative investment.
- Excise Taxes: Excise taxes aim to discourage consumption of harmful substances, generate revenue, and protect domestic industries.
- Environmental Taxes: Environmental taxes internalize the costs of environmental damage and encourage sustainable practices.
- Stamp Duty: Stamp duty revenue contributes to government revenue and may be allocated to various public services and initiatives.
- Inheritance Tax: Inheritance tax helps redistribute wealth and generate revenue for the government.
Legal Framework
The specific taxes in Georgia are established and regulated by various legal statutes and regulations:
- VAT: Value Added Tax Code of Georgia
- Property Tax: Law of Georgia on Property Tax
- Excise Taxes: Excise Tax Code of Georgia
- Environmental Taxes: Law of Georgia on Environmental Protection
- Stamp Duty: Law of Georgia on Stamp Duty
- Inheritance Tax: Law of Georgia on Inheritance Tax
These legal frameworks outline the obligations, rates, and procedures for the collection and enforcement of specific taxes in Georgia.
If delving into the depths of Georgian tax rules and regulations isn't your style, and you'd rather have experts take the reins, then Heavnn is here to help.
Let us simplify your tax planning journey. Access Heavnn's blend of professional expertise and cutting-edge technology by clicking the button below.
