Tax Code (1997) (excerpts)




Article 7. Economic activity

1. Economic activity is any legal activity directed at gaining profit, income or compensation in spite of the result of such activity, unless otherwise determined by this Article.

2. Non-economic activity is:

a) activity of state power and of institutions of local government not directly connected with the carrying out of the function assumed to them by the legislation, except the cases of paid service on the basis of an agreement and other entrepreneurial activity;

b) charities;

c) religious activity.

3. Economic activity can be entrepreneurial and non-entrepreneurial.


Article 10. Charities

1. For the aims of this Code a charity is a direct financial aid including grant and other kinds of aid to physical persons who need such aid or organizations (including charity organizations) giving such aid and educational and scientific activity carried out by an organization proceeded from social interests, unless otherwise determined by this Article.

2. Except the cases specified in the third item of this Article, a charity is an aid to:

a) not sufficiently provided physical persons or physical persons who need social adaptation and social protection;

b) children having no parents (a parent), pre-school or other children’s institutions taking care of such children;

c) invalids or old people and organizations taking care of invalids and old people;

d) physical persons who need medical assistance (aid or special care) in the form of payment for medical or another similar service (including transportation to the destination of such service) and organizations having the status of a medical institution;

e) educational institutions including granting;

f) scientific and cultural institutions;

g) particularly gifted physical persons for the development of their talent;

h) organizations striving for protection of the nature and population from pollution and other harmful influence;

i) religious organizations;

j) places of confinement for improvement of the conditions of care and medical assistance of the persons located at these places.

Aid to a person is not considered a charity if:

a) the recipient of such aid gets property or non-property liability (except the liability to use received resources or property only for special purpose) to the person who gave him such aid;

b) the donor and the recipient of such aid represent interdependent persons according to Article 24 of this Code;

c) such aid has a political character for any political party, social organization (movement), election union or any physical person, including transfer of financial resources for participation in the election campaign.


Article 47. Tax privileges

The following profits are free from the profit tax:

a) profit received from realization of crosses, candles, icons, books and calendars used by the Georgian partiarchate with religious purpose;

b) profit of budgetary or charity organizations, except profit received from economic activity;

c) grants, membership dues and donations received by an organization;

d) profit received from supply of the own agricultural production before the industrial processing of the enterprises, the primary activity of which is production of agricultural goods;

e) profit received from profile activity of orthopaedic enterprises;

f) profit received from production of technical equipment, necessary for invalids and their rehabilitation;

g) profit of invalids’ public societies and enterprises, if not less than 70% of the employees of this enterprise are invalids (for societies of blind, deaf, and dumb people - not less than 50%);

h) profit of international organizations, except profit received from economic activity;

i) income of the "National Bank of Georgia".


Article 112. VAT rates

1. The rate of VAT makes up 20% of the amount of taxable import.

2. Taxable turnover is the sum of the amounts of the taxable operations, carried out during an accounting period.


Chapter 21. Property tax for enterprises

Article 140. Tax payers

Payers of the property tax for enterprises are:

a) Georgian enterprises;

b) branches and subdivisions of enterprises, specified in point a) of this Article, having independent balance and account;

c) foreign enterprises, carrying out entrepreneurial activity in Georgia by permanent institutions.


Article 143. Tax privileges

Free from the tax are:

a) property used for protection of nature and fire-safety;

b) land;

c) motor-car roads;

d) standard and stand plants of the territorial bodies of the State Department of Standardization, Metrology and Certification of Georgia;

e) property transferred to the conservation conditions, by the determined rule;

f) property of an organization;

g) property of public societies and enterprises of invalids, if invalids consist not less than 70% of the employees of these enterprises (at the societies and enterprises of deaf, dumb, and blind people not less than 50%).


Chapter 26. Tax on Transfer of Immovable Property

Article 164. Tax payers

A payer of the tax during transfer of immovable property is the recipient of the property.

Article 165. Object of taxation

1. The object of taxation is any document on the basis of which issuance of the document, confirming transfer of the property right on the immovable property located in Georgia, or the deed of lease of such property, in particular:

a) a deed;

b) a lease agreement;

c) a document, confirming transfer of the possession right to the leaser.

2. The object of taxation does not include a mortgage or other document that creates an obligation on immovable property, or an agreement on securing of this obligation.

Article 166. Tax exemption

Free from the tax is:

a) a lease agreement for a term of less than 3 years;

b) a transfer to a spouse, parent, son or daughter;

c) a transfer on the basis of divorce;

d) a gratuitous transfer to a State, budgetary, charitable or religious organization;

e) a transfer in case of reorganization.


Article 172. Tax privileges

Free from the tax is:

a)the receipt of property through inheritance from a deceased person or as a gift by heirs of the first and the second order;

b) 50,000-lari worth property when being received through inheritance;

c) 1000-lari worth property when being gifted.

2. The exemptions indicated in points c) of the first item of this Article are allowed only once for the same transferor and the same transferee during the same calendar year.