Understanding Employer Tax Obligations in Georgia

As an international HR professional, navigating Georgia's tax landscape requires clarity on employer responsibilities. Since 2008, Georgia's Tax Code amendments eliminated the 20% social tax for employers, meaning companies no longer contribute to mandatory social insurance beyond the current pension scheme.

Funded Pension Scheme (FPS)

Implemented in 2019, the Funded Pension Scheme represents Georgia's primary mandatory social security system. It applies to Georgian citizens, permanent residents, and stateless individuals earning income through employment. All employees are automatically enrolled except males over 60, females over 55, and self-employed individuals at implementation.

The FPS operates through a tripartite contribution system:

Taxable Income (GEL)	Employee Rate	Self-Employed Rate	Employer Rate	State Rate
0 - 24,000	2%	4% (voluntary)	2%	2%
24,001 - 60,000				1%
Over 60,000				0%

Employers must process contributions through Georgia's electronic pension system simultaneously with salary payments. For bank transfers, the system automatically deducts contributions, while cash payments require manual calculation and submission.

Voluntary Private Pension (VRP)

Introduced in 2023, VRP serves as supplementary retirement savings. Employers may choose to match employee contributions, with terms defined through private pension agreements. Both individual and collective plans are available through employers or trade unions.

Additional Employer Considerations

While not mandatory, many companies provide benefits like health insurance, professional training, and transportation allowances. These are typically considered taxable benefits for employees, though they enhance overall compensation packages.

Employee Tax Responsibilities in Georgia

Georgia's tax residents pay income tax on worldwide earnings, while non-residents are taxed only on Georgian-source income. The typical employee tax burden comprises:

Funded Pension Scheme: 2%
Personal Income Tax: 20%
Voluntary Private Pension: Variable

Personal Income Tax (PIT)

Georgia employs a progressive tax system with rates from 5% to 20%:

Income Source	Description	Tax Rate
General Income	Standard employment earnings	20%
Residential Rental	Income from housing rentals	5%
Asset Rental	Vehicle/equipment leasing	5%
Gambling Operations	Casino/gaming income	15%

Employers typically withhold PIT monthly and submit payments by the 15th of the following month. Employees must file annual tax returns by April 1st for non-wage income.

Taxable Income Components

Taxable income includes:

Salary and bonuses
Employer-provided benefits (accommodation, education assistance)
Company vehicle usage (based on engine capacity)
Investment income and dividends

Tax Exemptions and Incentives

Georgia offers numerous exemptions, including:

Pension contributions up to 6,000 GEL
Property sales after 2+ years ownership
Inheritances and small gifts
Specific categories for heroes, single parents, and disabled individuals

Companies like SailGlobal provide essential guidance for multinational employers navigating Georgia's unique tax environment, ensuring compliance while optimizing compensation strategies.

Georgia Employer and Employee Taxes: Complete Guide for International HR