Georgia's tax administration has introduced expanded reporting obligations that directly affect foreign entities conducting business in the country. The changes took effect on January 1, 2025, with full enforcement applying from the first quarterly reporting period of that year. Foreign businesses that have not yet reviewed their exposure risk penalties, automatic assessments, and – in some cases – a deemed permanent establishment finding by the Sakartvelos Shemusavebeli Samsakhuri (Revenue Service of Georgia).
The new requirements oblige foreign entities with Georgia-sourced income to register with the Revenue Service of Georgia and file periodic tax disclosures covering corporate income tax and withholding tax positions. Entities that meet the threshold criteria must submit their first compliant return no later than the end of the quarter following the quarter in which the triggering activity began. Failure to register or file within that window exposes the entity to administrative surcharges calculated on the unpaid or undisclosed tax base.
This alert explains exactly what changed, which business categories are affected, and the immediate steps international companies should take now.
What changed and when it applies
Georgia's tax legislation was amended to require foreign legal entities to file detailed disclosures whenever they derive income from Georgian sources or maintain a taxable presence in the country. The change applies from January 1, 2025.
Three specific obligations are new or materially expanded. First, foreign entities must now self-assess and report withholding tax on payments received from Georgian resident counterparties, rather than relying solely on the payer to withhold. Second, entities invoking a tax treaty to reduce or eliminate withholding tax must file a formal treaty-relief claim with supporting documentation at the time of each payment cycle – not retroactively. Third, any entity that may constitute a permanent establishment under Georgia's tax legislation must notify the Revenue Service within 30 days of the activity commencing.
The permanent establishment threshold has also been clarified. A foreign entity providing services in Georgia for an aggregate of more than 183 days in any 12-month period now triggers an automatic reporting obligation. Regardless of whether a formal branch or subsidiary has been registered. Practitioners advising clients in the CIS region note that this aligns Georgia more closely with OECD-standard permanent establishment concepts, but the enforcement mechanism is stricter than in comparable jurisdictions.
For a broader view of how these obligations interact with Georgian corporate legislation, see our overview of corporate law in Georgia.
Who is affected and what the thresholds are
The new reporting rules apply to foreign entities that fall into any of the following categories.
- Foreign companies receiving dividends, interest, royalties, or service fees from Georgian resident payers.
- Non-resident entities providing digital or remotely delivered services to Georgian customers where cumulative annual revenue from those customers exceeds a defined threshold set in tax legislation.
- Foreign partnerships and investment vehicles that hold Georgian real property or equity interests in Georgian entities.
- Entities claiming reduced withholding tax rates under a tax treaty between their home jurisdiction and Georgia.
Tax residency status is critical. A foreign entity that has obtained Georgian tax residency – through incorporation, effective management, or a qualifying presence – falls under the full domestic corporate income tax regime rather than these new non-resident reporting rules. The distinction matters: non-residents face withholding tax on gross income, while residents are taxed on net profit. Misclassifying tax residency status is one of the most common and costly errors that international clients make when entering the Georgian market.
Georgia has concluded tax treaties with a significant number of countries. However, treaty relief is not automatic under the new rules. A foreign entity must affirmatively claim treaty protection by submitting a certificate of tax residency from its home jurisdiction, translated into Georgian, together with each filing. Entities that previously assumed treaty protection would apply without filing are now at risk of full withholding tax assessments plus interest.
To receive an expert assessment of your entity's reporting exposure in Georgia, contact us at info@ferrazwhitmore.com.
Immediate actions for international companies
International companies with any Georgian-source income or operational presence should act before the next quarterly filing deadline. The following steps reflect the minimum required under the amended tax legislation.
- Audit all Georgia-sourced payment flows – identify every payment stream from Georgian counterparties, including dividends, service fees, interest, and royalties. Determine whether withholding tax has been correctly applied and reported on each stream.
- Assess permanent establishment risk – review the activities of employees, agents, and contractors in Georgia over the past 12 months. If the 183-day threshold has been reached or approached, file a notification with the Revenue Service immediately.
- Prepare treaty-relief documentation – obtain a current certificate of tax residency from the relevant home-jurisdiction authority. Arrange certified Georgian translations before the next payment cycle.
- Register with the Revenue Service if not already registered – foreign entities that have not yet registered but meet the threshold criteria should complete registration without delay. Late registration does not extinguish the underlying tax liability and compounds the penalty exposure.
- Review prior-period filings – consider whether any prior quarterly or annual returns require amendment in light of the new rules. Voluntary disclosure before an audit typically results in materially lower penalties under Georgia's tax legislation.
For detailed guidance on structuring a Georgian tax-compliant presence, our analysis of tax law in Georgia sets out the full regime for foreign entities. Companies operating across the CIS region may also find our related alert on tax reporting changes in Russia relevant to their broader compliance review.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our tax law practice supports foreign entities navigating corporate income tax compliance, withholding tax obligations, and tax treaty claims in Georgia and across CIS and high-growth markets. As a law firm with practitioners experienced before the Revenue Service of Georgia and familiar with both civil law traditions and English-language compliance standards, we help international companies build defensible tax positions from the outset. Engaging a lawyer in Georgia with cross-border experience is particularly important when the rules change quickly and enforcement follows shortly after. To discuss your entity's compliance position, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.