Tax administration is being tightened in several directions nowadays. According to the new tax bill, the changes will affect both individuals and legal entities.
One of crucial novelties coming into effect starting from 2024 is related to the requirements of the obligatory registration for the Value Added Tax (VAT) payers. So far, an entity has been obliged to apply for VAT registration within two working days after its turnover within Georgia, which may be regarded as subject to VAT, in any 12 consecutive months has reached 100,000 GEL. From January 2024 on, in case the same business is using several legal forms or several types of entities, and all these entities are proven to have been owned or ruled by the same manager, i.e. if the business type, location, ownership and/or management of all of these entities is identical, the Revenue Service auditors may regard all these entities as one and sum up their VAT taxable turnovers for the purposes of obligatory VAT payer registration. If their total turnover during the consecutive 12 months has reached 100,000 GEL, all these entities automatically become subject to VAT.
Suppose that one owner governs 5 identical companies and keeps each of their turnovers below 100,000 GEL for each 12 consecutive months to avoid VAT. Or he/she operates one company till it reaches max 99,999 GEL, then pauses it and opens an entity similar to the previous one, keeps it working again to reach max 99,999 GEL, and follows this scheme endlessly. From 2024 on all these companies are obliged to register as VAT payers.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
