Profit left in the company is not taxed until you take it out

A developer who finishes a project, keeps the surplus inside the company and puts it into the next site pays no corporate income tax on that profit at the moment it is earned. A developer who takes the same surplus out as a dividend pays 15%. That is the single largest structural incentive in the Georgian tax system for anyone operating through a company, and it explains a pattern visible across the market: reinvestment rather than distribution, and balance sheets that hold land. It is a deferral and not a gift — the tax arrives whenever the money finally leaves — but a deferral across several project cycles is worth a great deal.

Distribution is not the only taxable event. Costs unrelated to economic activity are caught, which includes undocumented expenses and expenses not aimed at earning income. So are free-of-charge supplies of goods, services or funds, and inventory or fixed-asset shortages once they are discovered. Loan interest above the 24% annual rate set by the Minister of Finance is treated as a non-business cost. For a small property company these are the real exposures, not dividends: a flat let to a relative for nothing, materials that vanished from a site, a bundle of receipts nobody kept. Each is a taxable transaction rather than simply a bad year.

Representative expenses are deductible up to 1% of the previous year's revenue or expenses, whichever is greater, and anything above that becomes taxable. For a young company with a small first year, that ceiling is low in absolute terms exactly when the business is doing the most hosting — the site visits, the agents, the broker dinners. The practical move is to work out the figure at the start of the year rather than discover it at the end, because the limit is set by last year's numbers and is therefore known in advance.

Dividends paid between Georgian legal entities are not subject to corporate income tax, and dividends received from foreign enterprises are also outside it, except where they come from persons registered in countries with preferential tax regimes. For an owner holding several properties through separate companies under one holding, that means profit can be consolidated upward without a tax charge at each step, and the charge falls once, when it leaves the group. The exception for preferential regimes is the part that catches structures assembled offshore for other reasons, and it is the first thing to check before a holding company is chosen rather than after.