Georgia's tax system comprises various levies on both employers and employees, contributing to the state's revenue and funding public services. Understanding these obligations is crucial for businesses operating within Georgia to ensure compliance and avoid penalties. This guide provides a comprehensive overview of employer tax responsibilities and employee tax deductions in Georgia for 2025, covering social security, payroll taxes, income tax withholding, deductions, compliance, and special considerations for foreign entities.
Employer Social Security and Payroll Tax Obligations
Employers in Georgia are responsible for contributing to social security and other payroll taxes on behalf of their employees. These contributions are mandated by law and fund various social programs.
- Unified Social Tax (UST): This mandatory payment includes contributions for pension, healthcare, and social insurance.
- Pension Fund: 22% of the gross salary, with 2% paid by the employee and 20% by the employer.
- Healthcare: Calculated as a percentage of the employee's gross salary. The specific rate is subject to annual adjustments.
- Social Insurance: A mandatory contribution for unemployment and other social benefits.
| Tax Component | Rate (Employer) | Rate (Employee) |
|---|---|---|
| Pension Fund | 20% | 2% |
| Healthcare | Varies | Varies |
| Social Insurance | Set Annually | N/A |
Income Tax Withholding Requirements
Employers are required to withhold income tax from their employees' salaries and remit these amounts to the Georgian tax authorities. The amount to be withheld depends on the employee's income level and any applicable deductions or allowances.
- Income Tax Rate: A flat rate of 20% applies to most forms of income, including salaries and wages.
- Withholding Calculation: Employers must use official tax tables or software provided by the Georgian Revenue Service to calculate the correct amount of income tax to withhold.
Employee Tax Deductions and Allowances
Employees in Georgia may be eligible for certain tax deductions and allowances that can reduce their taxable income. These deductions can vary based on individual circumstances.
- Standard Deduction: A basic deduction is available to all taxpayers.
- Dependent Allowances: Taxpayers may claim allowances for dependent children or other qualifying relatives.
- Other Deductions: Certain expenses, such as educational expenses or medical costs, may be deductible subject to specific limits and conditions.
Tax Compliance and Reporting Deadlines
Adhering to tax compliance requirements and meeting reporting deadlines is essential for both employers and employees in Georgia.
- Monthly Reporting: Employers must submit monthly payroll tax reports and remit withheld income tax and social security contributions by the 15th of the following month.
- Annual Reporting: Employers must also file an annual income tax return, reporting the total income tax withheld from employees during the tax year.
- Deadlines:
- Monthly reports: 15th of the following month
- Annual returns: March 31st of the following year
Special Tax Considerations for Foreign Workers and Companies
Foreign workers and companies operating in Georgia may be subject to specific tax rules and considerations.
- Double Tax Treaties: Georgia has double tax treaties with several countries, which may provide relief from double taxation for foreign workers and companies.
- Permanent Establishment: Foreign companies must determine whether they have a permanent establishment in Georgia, as this may trigger corporate income tax obligations.
- Tax Residency: The criteria for determining tax residency in Georgia can impact the tax liabilities of foreign workers.
- VAT: Foreign companies selling goods or services in Georgia may need to register for Value Added Tax (VAT).
