Tax Residency in Georgia
Determining tax residency in Georgia is crucial for individuals and entities to fulfill their tax obligations accurately. The country's tax laws establish specific criteria to define tax residency, and international tax treaties may introduce modifications or exceptions to these criteria.
Criteria for Tax Residency in Georgia
According to Article 10 of the Tax Code of Georgia, an individual is considered a tax resident if they meet any of the following conditions:
- Physical presence in Georgia for more than 183 days in a calendar year.
- Permanent residence in Georgia, as evidenced by a residence permit or other official documentation.
- Domicile in Georgia, as determined by the individual's intention to reside permanently in the country.
For legal entities, tax residency is determined based on their place of incorporation or management and control. Entities incorporated in Georgia or having their management and control exercised in Georgia are considered tax residents.
Impact of International Tax Treaties
Georgia has entered into several double taxation treaties (DTTs) with other countries to prevent double taxation and facilitate cross-border economic activities. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, the DTT between Georgia and the United Kingdom specifies that an individual is considered a resident of Georgia if they have a permanent home available to them in Georgia and spend more than 183 days in the country in a tax year. This treaty also includes tie-breaker rules to determine residency in cases where an individual is considered a resident of both Georgia and the United Kingdom under their respective domestic laws.
Rationale and Objectives
The criteria for tax residency in Georgia aim to ensure that individuals and entities with significant ties to the country contribute to its tax revenues. By establishing clear rules for determining tax residency, Georgia seeks to prevent tax evasion and ensure fairness in the distribution of tax burdens.
International tax treaties play a crucial role in modifying or providing exceptions to these criteria to prevent double taxation and promote cross-border economic activities. These treaties reflect Georgia's commitment to international cooperation and its desire to facilitate trade and investment with other countries.
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