VAT / GST Rate in Georgia

VAT in Georgia

The VAT/GST Rate indicator assesses the standard value-added tax rate on goods and services. Georgia scores 34/100 with a VAT rate of 18% – slightly below the EU average but not among the lowest globally. The rate itself is unremarkable; what matters more for businesses is the set of exemptions and the quality of the administration.

How Georgia's VAT Works

The standard 18% VAT applies to the sale of most taxable goods and services within Georgia. Key structural features:

• Registration threshold: GEL 100,000/year (~USD 35,000). Businesses with annual turnover below this amount are VAT-exempt and need not register. Many small businesses and freelancers deliberately stay below this threshold.
• Zero-rated exports (0%): All exported goods and services – including digital services sold to non-Georgian clients – are zero-rated. Input VAT on those activities is refundable.
• Exempt activities: Healthcare, education, financial services, residential property sales, and certain cultural activities are exempt from VAT (not zero-rated, meaning input tax is not recoverable on those supplies).
• Electronic filing: VAT returns are filed monthly via the Revenue Service online portal (rs.ge). The system is digital and generally reliable. VAT invoices are issued electronically.

The Virtual Zone VAT Advantage

For IT and digital services companies, the Virtual Zone Person (VZP) status provides a powerful VAT benefit: services rendered to clients outside Georgia are zero-rated, and the VZP owes no VAT on those revenues. This means a Georgian software company serving EU or US clients effectively operates in a VAT-free environment for its core business. No VAT charged to clients, no complex VAT reporting on foreign transactions, and input VAT on Georgian business expenses can be recovered.

VAT Refunds for Exporters

Export-oriented companies frequently accumulate VAT credits from purchases on which they paid 18% input VAT, but their outputs are zero-rated. Georgia's Revenue Service processes refund applications digitally. Straightforward claims (supported by export documentation) are typically resolved within 30–60 days. Complex refunds involving significant audit scrutiny can take longer. This is an area where Georgia has improved but still lags behind the most streamlined European systems.

VAT for Small Businesses and Expats

For many expat business owners in Georgia, the VAT system is effectively irrelevant: those who operate below the GEL 100,000 threshold have no VAT obligations at all. Freelancers with a Virtual Zone structure pay 0% VAT on foreign services. The 18% rate primarily affects retail businesses, restaurants, construction, and locally-focused service providers. Consumer-facing businesses operating in Georgia should budget accordingly.

Practical Issues: The Import Chain

Georgia levies 18% import VAT on goods brought into the country, plus customs duties where applicable. For businesses importing equipment or raw materials, this creates a cash flow burden (VAT paid upfront, refunded later). The process has been streamlined through the customs union agreements but remains a consideration for import-heavy businesses.

Conclusion: Score 34/100 – Georgia's 18% VAT is unremarkable on its own, but the combination of the GEL 100,000 exemption threshold, zero-rating for exports and VZP services, and a functional digital filing system makes the effective VAT burden quite manageable – especially for export-oriented and tech businesses.

Created: 2026-04-14