Georgia operates a relatively straightforward tax system, particularly concerning employment income. The country has adopted a flat tax rate for personal income, simplifying calculations for both employers and employees. Employers play a crucial role in this system by correctly calculating, withholding, and remitting various taxes on behalf of their employees, as well as fulfilling their own contribution obligations. Understanding these requirements is essential for compliant operation within Georgia.
Managing payroll and employment taxes involves several key obligations for employers. These include contributions to the mandatory pension scheme and the correct calculation and payment of income tax withholding. Compliance with these requirements ensures that both employer and employee contributions are correctly accounted for and remitted to the relevant authorities.
Employer Social Security and Payroll Tax Obligations
Employers in Georgia are required to contribute to the mandatory pension scheme. This contribution is calculated as a percentage of the employee's gross salary. The rate is fixed and applies uniformly across most employment types. There are no additional significant social security taxes or unemployment contributions levied on employers beyond the pension scheme contribution.
| Contribution Type | Rate (as % of Gross Salary) |
|---|---|
| Mandatory Pension | 2% |
These contributions must be calculated and paid monthly alongside the withheld income tax.
Income Tax Withholding Requirements
Georgia applies a flat personal income tax rate to employee salaries. Employers are responsible for withholding this tax from the employee's gross salary before payment. The calculation is straightforward: the flat tax rate is applied directly to the gross monthly income. There are generally no complex tax brackets or progressive rates for standard employment income.
| Income Type | Tax Rate |
|---|---|
| Employment Income | 20% |
The employer must calculate the 20% income tax on the employee's gross salary and remit this amount to the tax authorities.
Employee Tax Deductions and Allowances
While Georgia has a flat income tax system, there are limited provisions for employee tax deductions or allowances that would reduce the taxable base for standard employment income. The 20% income tax is typically calculated on the full gross salary. Specific exceptions or allowances are rare for regular employees and usually pertain to very specific circumstances not applicable to the general workforce. The mandatory pension contribution made by the employee (2% of gross salary) is also subject to income tax; it is not deducted from the taxable base.
Tax Compliance and Reporting Deadlines
Employers are required to file monthly tax declarations and make corresponding tax payments. The deadline for filing the monthly tax declaration and paying the withheld income tax and employer/employee pension contributions is typically the 15th day of the month following the reporting month. For example, taxes for January must be declared and paid by February 15th. Annual reporting obligations also exist, summarizing the total income paid and taxes withheld for each employee during the calendar year.
- Monthly Deadline: 15th day of the following month for declaration and payment.
- Annual Reporting: Specific deadlines apply for annual summaries, usually early in the year following the tax year.
Accurate and timely filing and payment are crucial to avoid penalties.
Special Tax Considerations for Foreign Workers and Companies
Foreign individuals working in Georgia are generally subject to the same income tax rules as Georgian citizens if they are considered tax residents. Tax residency is typically determined by physical presence in Georgia for more than 183 days in any continuous 12-calendar-month period. Non-resident individuals earning income from a Georgian source, including employment income, are also subject to Georgian income tax, often through withholding by the employer.
Foreign companies operating in Georgia and employing staff are subject to the same employer tax obligations as local companies, including income tax withholding and pension contributions. Specific considerations may apply depending on the foreign company's legal presence (e.g., branch, representative office, or simply employing remotely without a registered entity), which can impact registration and reporting requirements. However, the core obligation to withhold income tax and contribute to the pension fund for employees working in Georgia remains. Double taxation treaties may offer relief in certain situations, but the initial withholding obligation typically still applies.
