Salary Tax in Georgia: Rate, Calculation and Deadline

Salary tax in Georgia is a flat 20%, withheld by the employer before the salary is paid. You get the withholding wrong when you apply the rate to the full gross salary, skip the pension step or pay an employee as a contractor. The result is incorrect net pay, and an understated declaration carries interest and a penalty. This post covers the income tax rate for employees in Georgia, the calculation order, gross-to-net figures, employer cost and the filing deadline.

Income Tax Rate on Salaries in Georgia

Georgia taxes salaries at a flat 20%. The rate is set in Article 81 of the Tax Code of Georgia, with no brackets and no progressive steps. The employee gets no tax-free amount and no relief for dependents, and a low salary is not taxed at a reduced rate, so a ₾1,000 salary and a ₾10,000 salary are taxed at the same rate.

The employer deducts the tax from the salary and transfers it to the Revenue Service. The employee receives the net amount and does not pay the tax separately. An employee whose employer withholds the tax generally has no annual income tax return to file for that salary.

Income tax is one of three amounts in a salary calculation:

Amount	Rate	Calculated on	Paid by
Employee pension contribution	2%	Gross salary	Employee, withheld by the employer
Income tax	20%	Gross salary minus the employee pension contribution	Employee, withheld by the employer
Employer pension contribution	2%	Gross salary	Employer, on top of the gross salary

How to Calculate Net Salary From Gross

Calculation Order: Pension First, Then Income Tax

The 20% is charged on the salary after the employee’s pension contribution is deducted. On a gross salary of ₾2,500 a month, the calculation runs in this order:

1. Take 2% of the gross salary as the employee pension contribution, which is ₾50.
2. Subtract it from the gross salary to get the taxable base of ₾2,450.
3. Take 20% of the taxable base as income tax, which is ₾490.
4. Subtract both amounts from the gross salary to get the net pay of ₾1,960.
5. Add the employer’s own 2% pension contribution, another ₾50, to the gross salary to get the total cost of ₾2,550.

Applying 20% to the full ₾2,500 gives ₾500. That is ₾10 more than the tax due, and the employee is paid ₾10 too little every month.

Gross-to-Net Formula

For an employee in the pension scheme, the two deductions always leave the same share of the gross salary. The calculation reduces to three multipliers:

To find	Calculation	Example
Net salary from gross	Gross × 0.784	₾3,000 gross gives ₾2,352 net
Gross salary from net	Net ÷ 0.784	₾4,000 net needs ₾5,102.04 gross
Total employer cost	Gross × 1.02	₾3,000 gross costs ₾3,060

Use the second line when a salary is agreed in net terms. A net salary of ₾4,000 needs a gross salary of ₾5,102.04, which carries ₾102.04 of employee pension and ₾1,000 of income tax. The employer’s total cost for that salary is ₾5,204.08.

Gross-to-Net Salary Table

The figures below are monthly and apply to an employee in the pension scheme.

Gross salary	Employee pension (2%)	Income tax (20%)	Net salary	Employer pension (2%)	Total employer cost
₾1,000	₾20	₾196	₾784	₾20	₾1,020
₾2,000	₾40	₾392	₾1,568	₾40	₾2,040
₾3,000	₾60	₾588	₾2,352	₾60	₾3,060
₾5,000	₾100	₾980	₾3,920	₾100	₾5,100
₾8,000	₾160	₾1,568	₾6,272	₾160	₾8,160
₾10,000	₾200	₾1,960	₾7,840	₾200	₾10,200

Because the rate is flat, the net salary is 78.4% of gross at every level. The income tax works out at 19.6% of the gross salary, and the employee pension contribution at 2%.

Salary Tax for Foreign Employees

The pension scheme runs under the Law of Georgia on Funded Pension. Georgian citizens have to join, and so do foreign citizens and stateless persons with a permanent Georgian residence permit. Membership is optional for men who were already 60 and women who were already 55 on the date the law came into force.

A foreign employee without a permanent permit is outside the scheme, so no employee contribution is withheld and the employer owes none. With no pension contribution to deduct, the 20% applies to the full gross salary. On ₾3,000 gross, the income tax is ₾600, the net salary is ₾2,400 and the employer’s cost is ₾3,000.

Total Cost of an Employee to the Employer

For an employee in the pension scheme, the employer pays the gross salary plus its own 2% pension contribution, so the total cost is 102% of gross. The employee receives 78.4% of gross, which is about 76.9% of the employer’s total cost.

Over a year, a gross salary of ₾3,000 a month comes to these amounts:

• gross salary: ₾36,000
• employer pension contribution: ₾720
• total employer cost: ₾36,720
• income tax withheld: ₾7,056
• employee pension contribution withheld: ₾720
• net salary paid to the employee: ₾28,224

The state adds a third pension contribution from the budget, which costs neither the employer nor the employee anything. It is 2% on the first ₾24,000 of annual salary, 1% on the next ₾36,000 and nothing above ₾60,000 a year. On ₾36,000 a year the state adds ₾600. The employee and employer pension contributions stay at 2% on every lari of gross salary, with no ceiling.

Salary Tax Declaration and Payment Deadline

The employer declares salary tax through rs.ge, the Revenue Service portal, by the 15th of the month after the salary was paid. Salaries paid in March are declared by 15 April. The withheld income tax and both pension contributions are paid by the same date.

Monthly Payroll Filing Steps

File and pay each month in this order:

1. Work out each employee’s gross salary, the 2% pension deduction and the 20% income tax.
2. Submit the withholding declaration on rs.ge for the salaries paid in the month before.
3. Transfer the income tax and the two pension contributions no later than the 15th.

The pension contributions reach the Pension Agency through the Revenue Service, so the payroll declaration is the only filing the employer makes for them. Filing the declaration does not pay the tax. The payment is made separately, in lari from a Georgian bank, under treasury code 101001000.

A business does not register a second time to become an employer. The rs.ge profile the business received at registration is used for payroll, and the employee’s details are added before the first salary payment. A business with employees files the payroll declaration alongside the monthly declaration it already owes, on the same date.

We calculate the withholding for each employee and file payroll and pension declarations before the 15th as part of the Business package. The package starts from ₾315 a month excluding VAT.

Late Payroll Declaration Penalty

A late payroll declaration is penalised automatically and carries interest, the same as any other late declaration. Any tax not paid by the deadline bears interest until the day it is paid. The 15th applies whatever the number of employees.

Payroll Records to Keep

Keep the signed contract, a monthly payslip showing the gross-to-net breakdown and a log of who was paid what and when. These are the records you need when the Revenue Service asks about a specific month.

Contractor Tax vs Employee Salary Tax

A contractor runs a registered business of their own, in most cases as a Georgian individual entrepreneur. They send you an invoice, report that turnover themselves and settle the tax on it. The business paying a genuine contractor has no withholding obligation.

A contractor with Small Business Status pays 1% of turnover up to ₾500,000 a year, with no expense deductions. Once turnover passes ₾500,000 in a year, the rate rises to 3%. An individual entrepreneur without the status pays 20% on business income after documented expenses. The pension scheme is voluntary for self-employed people.

The same ₾5,000 a month is taxed this way under each arrangement:

	Employee in the pension scheme	Contractor with Small Business Status
Amount agreed	₾5,000 gross salary	₾5,000 invoice
Tax	₾980 income tax	₾50 turnover tax
Pension withheld	₾100	None
Amount received after tax	₾3,920	₾4,950
Cost to the business	₾5,100	₾5,000
Who declares and pays	The employer, by the 15th	The contractor, in a monthly declaration

The Tax Code lets the Revenue Service assess a relationship by its actual content and not by the title of the contract. Fixed hours set by the business, equipment supplied by the business, day-to-day supervision, a single exclusive client and an open-ended arrangement together describe employment.

Owner and Director Salaries in an LLC

An LLC owner who works in the company can go on its payroll as an employee or director. The salary is taxed like any other salary. The company withholds 20% income tax every month, and for an owner in the pension scheme it also withholds the 2% employee contribution and pays the 2% employer contribution.

Georgian law sets no minimum salary for an owner, and many owners take only dividends. Salary is a deductible business expense, so it does not trigger corporate income tax. On a dividend, the company pays 15% corporate tax on the distribution, and 5% is then withheld from the dividend itself.

On ₾100,000 of company cost, a dividend and a salary compare as follows:

Payment	Tax	Owner receives now	Paid into the owner’s pension account
Dividend	₾15,000 corporate tax and ₾4,250 dividend withholding	₾80,750	Nothing
Salary	About ₾19,216 income tax on a gross salary of about ₾98,039	About ₾76,863	About ₾3,922

A salary is taxed every month as it is paid. Profit kept in the company is taxed at 0% until it is distributed, and a dividend is declared on the same monthly cycle as part of LLC accounting.

Does an Individual Entrepreneur Need a Salary?

No. An individual entrepreneur and the business are legally the same person, so the balance in the business account is the owner’s own money. A transfer to a personal account is not taxed, and putting yourself on a payroll does not reduce the 1% turnover tax.