Note: The article below does not constitute legal advice or tax consultation. Its purpose is to provide general information about tax rulings in Georgia, along with broad recommendations on when you might consider applying for a tax ruling. However, any decision should ideally be made only after receiving qualified tax advice from an experienced expert.

Tax Ruling for Achieving High Tax Certainty in Georgia

Georgia offers a range of highly attractive tax incentives for both individuals and legal entities, including low or even zero tax regimes (such as 0% of personal income tax on foreign source income). However, as in many other jurisdictions, certain provisions of the Georgian Tax Code are not always fully clearly defined. These ambiguities can lead to differing interpretations between taxpayers and the Georgia Revenue Service (GRS), the country’s tax and customs authority.

For example, a taxpayer may believe they (or their Georgian companies) qualify for a preferential tax regime in Georgia and therefore pay no tax or a reduced rate. However, the GRS might interpret the law differently. This can result in retroactive assessments of additional taxes, penalties, and late payment interest—even if the taxpayer acted in good faith.

While Georgia’s tax system is generally favorable, some of the legal provisions that govern tax exemptions and incentives fall into a legal “grey area.” This increases the risk of misinterpretation and potential disputes with the tax authorities.

To ensure a high level of tax clarity and certainty in Georgia, and to minimize the risk of future challenges by the GRS, it is frequently advisable to apply for an advance tax ruling—particularly when your case involves a legal grey area. However, in some situations, seeking a ruling may not be the most appropriate course of action.

Official tax ruling from the GRS provides a written confirmation of how tax laws will be applied to your specific case. By securing a positive tax ruling before relying on a tax exemption or incentive, you can more confidently plan your finances and avoid unexpected liabilities.

Tax Rulings to Clarify Grey Areas in Georgian Tax Law and Achieve High Tax Certainty

According to Article 47 of the Georgian Tax Code (GTC), the Georgia Revenue Service (GRS) may issue an advance tax ruling upon a taxpayer’s request. This ruling can apply to both future and completed transactions.

Most importantly, according to Article 47 of GTC if you act in accordance with an advance tax ruling, no controlling or law enforcement authority in Georgia can impose conflicting decisions, charges, or sanctions. This gives the ruling binding legal force, protecting the taxpayer from unexpected disputes with the tax authorities.

This mechanism is especially valuable when a provision in Georgian tax law involves a grey area—due to vague language or inconsistencies between the written law and practical enforcement. In such situations, you may submit a tax ruling application to the GRS (note: a state fee applies). If approved, a positive advance tax ruling in Georgia serves as a legal safeguard, ensuring that your tax treatment cannot later be challenged—as long as you comply with the ruling’s terms and until it loses its legal force.

It should be noted that tax ruling is not a public information and applies only to a tax payer who has applied for and has obtained it.

 When a Tax Ruling in Georgia Loses Its Legal Effect

According to Paragraph 6 of Article 47 of the Georgian Tax Code:

6. An advance tax ruling shall not be applied if:
    a) the facts and circumstances indicated in the advance tax ruling, and which would have affected the ruling, differ from those actually existing;

or

           b) the legal norm of Georgian legislation that formed the basis for the advance tax ruling has been repealed or amended.

Notably, if the legal norm based on which the tax ruling is issued is changed, the ruling loses its power prospectively, meaning that operations before such changes of the law still falls under protection of tax ruling.

Therefore, it is critically important to accurately and thoroughly describe all relevant facts of your situation in the tax ruling application. These facts should be presented from a clear and well-reasoned angle that maximizes your chances of receiving a positive advance tax ruling.

In addition, your local tax expert supporting the tax ruling process should aim to ensure that the ruling is based on reliable legal sources—such as specific articles of the Georgian Tax Code or other key Georgian tax legislation—rather than on internal guidance of GRS.

Common Scenarios Where a Tax Ruling in Georgia Can Help You Gain Tax Certainty

Below are some common real-world scenarios where a tax ruling might be relevant. However, it’s important to note that the presence of such a scenario does not automatically mean you should apply. It’s advisable to seek professional guidance from a qualified Georgian tax expert before deciding whether to pursue a tax ruling, as they can help assess individual circumstances and provide informed recommendations.

• You or your Georgian company have engaged in a complex business transaction, and its proper classification under Georgian tax law is not fully clear. This may not be about claiming tax benefits but about achieving tax clarity—for example, to determine whether the Georgia Revenue Service (GRS) might requalify the transaction based on its economic substance and how GRS interprets the relevant legal norms in your specific case. This is one of the most common reasons for applying for a tax ruling in Georgia.
• Your Georgian company holds “International Company” (IC) status—a preferential tax regime offering 5% corporate income tax and 5% wage tax—but some of your employees are not physically present in Georgia for most of the year, or your IC partly engages non-resident subcontractor software developers to perform core business activities.
• Your company has “Virtual Zone Person” (VZP) status, which provides a 0% corporate income tax rate for IT activities, but:

1. Your VZP also offers IT services beyond pure software development, and/or
2. Your employees are based outside Georgia, and
3. Salaries form only a small portion of total company revenue
   Note: Many aspects of the VZP tax regime remain uncertain in practice.

• You are a Georgian tax resident, trade foreign stocks, bonds, ETFs issued by foreign corporations and want to confirm that your capital gains are eligible for 0% personal income tax in Georgia, regardless of trading frequency and type of security traded.
• You are a Georgian tax resident, trade cryptocurrencies and want assurance that capital gains from crypto sales are exempt from personal income tax, regardless of how often or what type of crypto you trade.
• You earn foreign royalty income, such as book royalties from Amazon, and want to confirm that this income qualifies for 0% personal income tax and is fully exempt from VAT in Georgia.
• You’re a tax resident of Georgia providing services to a single client and plan to register as a “small business” to benefit from the 1% tax rate—but need to confirm that your income (service fees) qualifies under 1% regime and is not considered employment income.
• You’re a content creator (e.g., YouTuber) receive income from placing ads on your videos or generate affiliate marketing service income and want to register as a small business in Georgia to pay only 1% tax on your income.
• You own an offshore company (not managed from Georgia) and plan to distribute dividends to yourself, expecting to pay 0% personal income tax in Georgia. A tax ruling can confirm whether this interpretation is valid and reduce risk of challenge.

These are just a few examples. In each of these situations, obtaining an advance tax ruling in Georgia -when the income or transaction value is high enough to justify the cost- can offer significant benefits—providing higher legal clarity, reducing uncertainty, and minimizing the risk of unexpected tax reassessments.

However, it is important to understand that even a tax ruling does not always guarantee 100% tax clarity or absolute safety. There remains a small risk—typically just a few percent—that the ruling could be challenged later. This may occur if the Georgia Revenue Service (GRS) determines that the facts provided in the tax ruling application were incomplete or incorrect, or if the ruling was based on assumptions that the taxpayer did not adhere to.

When Should You Consider Applying for a Tax Ruling from the Georgia Revenue Service?

Writing this article does not imply a blanket recommendation to apply for a tax ruling in Georgia in all cases. In the author’s view, seeking a tax ruling is advisable only when specific conditions are met. To ensure the process delivers real value—by providing a high level of tax clarity and more secure tax implications—it is generally recommended to consider applying only if all of the following criteria are satisfied:

• The Georgian tax law relevant to your transaction is not fully clear, or falls into a legal grey area—creating a risk of conflicting interpretations between you (the taxpayer) and the Georgia Revenue Service (GRS).
• You have already evaluated the tax implications with a qualified Georgian tax advisor, and there are strong indications that a positive tax ruling is likely. That said, even a negative ruling can be valuable: it can reveal hidden tax risks early, allowing you to adjust your structure or approach and avoid costly future disputes.
• The transaction amount, potentially assessed tax, or expected tax benefit is large enough to make the cost of applying for the tax ruling reasonable and proportionate to the benefits it may bring.

Required Form and Format of the Tax Ruling Application in Georgia

When you submit a tax ruling application in Georgia, you are not merely asking questions—you are presenting all relevant facts of your case, outlining specific questions, and providing your own answers or legal arguments (for example, explaining why you qualify for a tax exemption).

A typical tax ruling application consists of three essential sections:

Section 1 of tax ruling application: Description of Facts

This section requires a detailed and complete description of all important facts related to your case that may affect your tax implications. Providing accurate and comprehensive facts—especially those that could influence the Georgia Revenue Service’s (GRS) decision—is critical. Any omission or incorrect presentation of facts can invalidate the tax ruling or cause it to lose its legal effect.

Section 2 of tax ruling application: Questions

In this section, you list all critical questions concerning your tax situation or transaction. It is vital to include every relevant question related to your case, because the ruling only protects you regarding the questions explicitly asked. For example, if you inquire whether your royalty income is exempt from personal income tax but omit questions about VAT, a positive ruling will protect you only from personal income tax issues—VAT matters could still be challenged by the GRS in the future.

Section 3 of tax ruling application: Legal Arguments

In Section 3, you, or your tax consultant representing you, must provide well-reasoned legal arguments based on applicable Georgian tax laws. These arguments should explain why the GRS should issue a positive ruling. For instance, if your request involves a personal income tax exemption, you must logically demonstrate in this section how you meet the requirements of the relevant legal provisions. For example, define why, based on Article 104 of the Georgian Tax Code, your income is considered foreign-source income.

The phase after submitting tax ruling application to GRS

After the application is submitted and accepted, the GRS reviews and analyzes it. Then, your tax consultant is invited for a face-to-face discussion at the premises of Ministry of Finance, where your representative tax consultant present and defend your case by addressing questions, concerns, and counterarguments from GRS representatives.

Preparing a tax ruling application is a highly specialized and delicate process that requires expert knowledge and skill. The likelihood of obtaining a positive and strong ruling depends considerably on the expertise and qualifications of the tax consultant who assists you throughout this process.

Government Fee for Tax Ruling Application in Georgia

As mentioned earlier, applying for a tax ruling in Georgia is a paid service provided by the Georgia Revenue Service (GRS). The GRS charges a government fee to review your application and issue a formal ruling. The current fees are:

• 5,000 GEL (approximately 1,800 USD) for individuals who were tax residents of Georgia in the previous year.
• 10,000 GEL (approximately 3,600 USD) for non-resident individuals and all legal entities.

In addition to this government fee, you will typically incur professional fees for engaging a qualified Georgian tax expert. These experts play a crucial role in preparing the application, submitting it correctly, and representing your case before the GRS. Their expertise significantly increases your chances of receiving a positive tax ruling that is legally well-founded and offers safer tax implications.

Notably, GRS will also answer your questions free of charge outside the tax ruling application process. However, such answers are only advisory, has a power of recommendation only and do not provide legal protection for the taxpayer in the event of a future tax inspection.

Enjoying Tax Incentives with High Tax Clarity in Georgia Through Advance Tax Rulings – Summary

Certain provisions of Georgian tax law—especially those related to tax exemptions and incentives—may fall into legal grey areas. To avoid uncertainty, it is generally advisable to apply such exemptions only after obtaining a positive tax ruling in Georgia, particularly when the legal basis for the exemption is not entirely clear and the cost of the ruling is proportionate to the expected tax benefits.

A favorable tax ruling issued by the Georgia Revenue Service (GRS) serves as a legally binding confirmation of your tax position, offering strong protection in the event of a future tax audit by the GRS.

Even a negative tax ruling, while not ideal, can still work in your favor. It provides early clarity, helps you avoid potential disputes, and gives you the opportunity to either adjust your plans or appeal the decision before any real conflict with the tax authority arises.

Applying for a tax ruling is an important strategic step. It is advisable to seek professional consultation to carefully assess the potential benefits and risks relevant to your specific situation before making a decision.

About the author: Gela Barshovi is the experience Georgian and international tax expert, founder of Tbilisi-based consulting and accounting firm TPsoution LLC. Gela personally supports clients in the entire process of tax ruling application. Email: Gela.barshovi@tpsolution.ge, TPsolution’s contact form: https://tpsolution.ge/contact/