Georgia's VAT rule changes concerning the supply of B2C digital services by non-resident businesses are in effect since October 1, 2021. The rules were originally planned to be effective from July 1, 2021, but a government announcement at the end of July postponed the VAT rule change by three months.
The official announcement of this postponement is available here (under 'VAT Portal on Digital Services'). Since October 1, 2021, affected digital businesses must collect and remit VAT on their sales to the Revenue Service of Georgia. The current standard rate of VAT in Georgia is 18%. The registration portal is available at: https://nr.rs.ge/
Georgia VAT: customer location evidence
The customer’s location may be established if one of the following pieces of location evidence confirms their location as being in Georgia:
- The customer’s bank details or the payment provider is based in Georgia
- The customer’s home address is in Georgia
- The customer’s IP address is Georgian
- The customer’s telephone country code of the device used to access the service is Georgian
The pieces of evidence listed above mirror some of those used in the EU’s 2015 VAT changes regarding the cross-border supply of telecommunications, broadcasting and electronic services (TBE).
This is further evidence of the harmonization between the Georgian and EU VAT systems. Unlike the EU, however, we understand that there is no sales threshold in Georgia for digital businesses that are impacted.
'Foreign business registration form'
Affected non-resident digital businesses will have to fill in a special form through the Revenue Service of Georgia’s website.
This form is called ‘Foreign taxable person registration form’ and requires some basic information about the affected digital business such as:
- Country of residence for tax purposes
- Their main economic activity
- Country of residence tax ID number.
Once this form is populated and submitted, our understanding is that the Revenue Service of Georgia will then provide a unique login to registered digital businesses for VAT reporting purposes.
Acknowledgement: Thanks to Natia Shamugia, Ecovis Georgia, for her help in researching this article.
PLEASE REMEMBER THAT THIS INFORMATION HAS BEEN PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT PRESENTED AS SPECIFIC TAX OR LEGAL ADVICE. ALWAYS CONSULT A QUALIFIED TAX OR LEGAL ADVISOR BEFORE TAKING ANY ACTION BASED ON THIS INFORMATION. VERTEX INC. ACCEPTS NO LIABILITY FOR ANY LOSS RESULTING FROM ANY PERSON ACTING OR REFRAINING FROM ACTION AS A RESULT OF THIS INFORMATION.