VAT Registration in Georgia (Country): A Comprehensive Guide

Value Added Tax (VAT) is a significant aspect of the tax system in Georgia. Understanding the VAT registration process is essential for businesses to comply with Georgian tax laws and optimize their operations.

What is VAT?

VAT is an indirect tax levied on the consumption of goods and services. It is applied at each stage of the production and distribution process, with businesses charging VAT on their sales and deducting VAT paid on their purchases. In Georgia, the standard VAT rate is 18%.

Who Needs to Register for VAT?

Businesses must register for VAT if their annual taxable turnover exceeds GEL 100,000.

Voluntary registration is also available for businesses below the turnover threshold. Voluntary registration may be beneficial for companies engaged in B2B transactions or those seeking to claim input VAT on their purchases.

Qualified vs. Unqualified VAT Payer Status

In Georgia, businesses can be classified as qualified or unqualified VAT payers.

• Qualified VAT Payers: Qualified VAT payers are fully registered for VAT and gain access to all VAT-related functions on the Revenue Service (RS) portal. This includes the ability to file VAT returns online, issue VAT-compliant invoices (Angarish-faqtura - official RS document when selling to Georgian companies), and claim input VAT on eligible purchases.

• Unqualified VAT Payers: These businesses cannot claim input VAT on their expenses. For instance, VAT incurred on goods or services purchased in Georgia cannot be reclaimed. However, unqualified VAT payers can still recover reverse VAT when applicable.

VAT Numbers in Georgia

Unlike some countries that issue separate VAT numbers to businesses, Georgia does not provide a distinct VAT number. Instead, the company's Tax Identification Number (TIN) is used for VAT-related purposes. This simplifies the process but requires businesses to ensure that their TIN is clearly displayed on all VAT invoices and official documents.

The VAT Registration Process in Georgia (Country)

Businesses can register for VAT either during their company registration at the Public Service Hall or later through the Revenue Service Portal.

1. Submit an Application: The VAT registration application is submitted online via the Revenue Service Portal. Approval typically occurs within a few minutes.

2. Apply for Qualified VAT Payer Status: Additional steps are required to obtain qualified VAT payer status, including a call from Revenue Service and submitting the following documents:

   • An official letter detailing the business's activities, office information, employee data, expenses, and counterparties, along with an explanation of the need for qualified VAT payer status.

   • Ongoing agreements with clients and service providers (e.g., lawyers, accountants, or other services).

   • Bank statements for the entire operational period.

     
     

Post-Registration Obligations

VAT-registered businesses in Georgia have the following responsibilities:

• File VAT Returns: Submit monthly VAT returns to the Revenue Service, detailing sales, purchases, and VAT collected and paid (when applicable)

• Pay VAT: Remit the net VAT amount (VAT collected minus VAT paid on purchases) to the tax authorities.

• Maintain Records: Keep detailed records of all transactions, including invoices, receipts, and other documentation, for at least 3 years.

Penalties for Non-Compliance

Failure to register for VAT or comply with VAT obligations can result in penalties, including fines and interest on unpaid taxes. To avoid these consequences, businesses should ensure timely registration and adherence to VAT regulations.

Conclusion

VAT registration is a critical step for businesses operating in Georgia. By understanding the registration process and complying with VAT requirements, businesses can avoid legal issues and streamline their financial operations.

VAT Registration in Georgia (country)