Hiring Under a Georgian Company: taxes

When hiring employees under a Georgian-registered business, such as an Individual Entrepreneur (IE) or Limited Liability Company (LLC), there are several key considerations employers need to keep in mind. Understanding the taxation and pension contributions is crucial for compliance and effective financial planning.

Hiring Georgian Citizens or Permanent Residents

Income Tax

In Georgia, employers are responsible for deducting, paying and declaring income tax on behalf of their employees. This tax is set at a flat rate of 20% and is calculated based on the employee's gross income. Here is a simplified overview of the process:

Pension Contributions

Pension contributions are another critical aspect of employment in Georgia. These contributions are part of a mandatory system aimed at securing employees' retirement benefits. The system generally requires contributions from both the employer and the employee, each contributing 2% of the employee's gross salary. Here’s how it works:

Hiring Temporary Residents

If business is hiring Georgian Temporary resident who also has tax residency here, they most likely will have to pay income tax.

Employers are not required to make pension contributions for temporary residents. This can result in significant savings for businesses that employ non-permanent residents, but it also means that these employees do not benefit from the Georgian pension system.

By understanding and adhering to these regulations, businesses can ensure compliance with Georgian law and maintain smooth and efficient payroll operations.