Witholding income tax on non-residents

11 October 2022

When purchasing services from non-residents, or in plain language – from foreigners, purchased service is taxed with 10% income tax. In this article we will be answering frequently asked questions regarding this topic.


In which cases does a company pay non-residents income tax?

Non-residents income tax is paid if a company purchases services from foreigners. It does not matter whether services are purchased from an individual or a company. Tax rate is 10% (except for services purchased from an entity registered in preferential taxation countries, in which case tax rate becomes 15%). Non-residents income tax is calculated based on “gross” amount. For example, if an entity acquires services for 90 EURO, respective tax amount will equal 10 EURO (90 / 90% * 10%) rather than 9 EURO.

Our company provides all relevant accounting services related to non-residents withholding income tax.


In which cases can a company avoid paying non-residents income tax?

Georgia has signed “double taxation avoidance treaty” with number of counties. Services acquired from those countries, with which Georgia has signed the mentioned agreements, are not subject to non-resident income tax. Full list of such countries is available on the following webpage https://www.mof.ge/en/5128

Company does not have to pay non-resident income tax, if both of the following criteria are satisfied:

  • Company buys services from countries, with which Georgia has signed double taxation avoidance agreements; and
  • Entity, from which company acquires services, provides its tax residency certificate, which confirms that it represents resident of a particular country. Such certificate is usually requested from the service provider.