The approach to property taxation in Georgia differs for businesses and individuals. The taxable object, applicable tax rate, and timing of taxation may vary depending on the taxpayer’s status. Understanding these distinctions is important for proper tax planning and compliance, particularly for companies holding significant fixed assets or real estate in Georgia.
Property Subject to Taxation for Enterprises
The Georgian property tax applies to both resident and non-resident enterprises with respect to property located in Georgia. The distinction between residents and non-residents does not materially affect the categories of taxable assets, but rather confirms the territorial scope of taxation.
Enterprises are subject to property tax on:
- Assets, uninstalled equipment, and construction in progress are recorded on their balance sheet as fixed assets and/or investment property;
- Property leased out by the enterprise.
- Real estate, as well as yachts (motor boats), helicopters, airplanes, and other vehicles;
- Such assets where they are received (appropriated) through enforcement measures for the performance of contractual obligations;
- Such assets where they are acquired through auction, direct sale, or other means in the course of enforcement of financial liabilities (excluding sanctions imposed under criminal or administrative procedures).
Non-resident enterprises are subject to property tax on the same categories of assets, provided that such property is located within the territory of Georgia. This applies irrespective of whether the property is used directly by the enterprise or transferred to another person under lease, rent, usufruct, or similar arrangements.
Property Tax Rate and Payment Deadlines
For enterprises and organizations, the annual property tax rate is set at up to 1% of the value of taxable property.
The taxable base is determined based on the average annual net book value of assets, calculated as the average of the value at the beginning and at the end of the calendar year. In certain cases, this value must be increased by statutory coefficients depending on the acquisition period of real estate. These adjustments generally apply to older assets unless the enterprise uses a revaluation model supported by audited financial statements, subject to specific conditions.
During a tax audit, the tax authority may determine the value of taxable property based on its market price. If the market value exceeds the book value, the difference may be subject to additional tax, and the adjusted value may be used for subsequent tax years.
Property tax on land is regulated separately. The applicable rates depend on the category of land (agricultural or non-agricultural), its location, and municipal coefficients within the limits established by legislation.
The tax period for property tax is the calendar year. Enterprises are required to submit their annual property tax declaration no later than 1 April of the following year and to pay the corresponding tax within the same deadline. The declaration reflects the previous year’s data for assets, while land is assessed based on the current year.
In addition, enterprises are generally required to make a current (advance) payment of property tax by 15 June of the current year, typically based on the prior year’s liability, unless a significant reduction in expected liability is properly substantiated.
Property tax on land must be paid no later than 15 November of the relevant calendar year.
Special Regime for Free Industrial Zones
It is important to note that enterprises registered in a Free Industrial Zone (FIZ) are exempt from property tax on property located within the territory of the zone. This exemption represents one of the key tax incentives available to companies operating in FIZs in Georgia.
Property tax in Georgia represents an ongoing cost for businesses holding assets connected to the state. The tax applies to a broad range of assets recorded on the balance sheet, including those obtained through enforcement mechanisms.
Accurate determination of the tax base, including proper valuation and application of statutory adjustments, as well as timely compliance with filing and payment obligations, is essential. Businesses should also consider the availability of specific exemptions, such as those applicable in Free Industrial Zones.