05.Dec .2022 15:45

Gov't Increases Income Tax For Banks From 15% To 20%

Gov't Increases Income Tax For Banks From 15% To 20%
views 670

Tax on companies of Georgia’s financial sector will be set at 20% instead of 15%, with taxation of banks and other entities no longer set to be switched to the Estonian tax model, Georgian Prime Minister Irakli Garibashvili announced on Monday.

"Banks will pay income tax according to international financial accounting reporting standards, which was not the case before”, he noted.

“Of course, we appreciate the role of banks in the growth of the economy. It is extremely important that we have a very developed banking system, two large (Bank of Georgia; TBC Bank) are on the London Stock Exchange. Of course, we will continue to support them in the future, but these are small adjustments we have made in the legislation, ” Irakli Gharibashvili said.

Garibashvili said net profit of banks would reach GEL 2 billion by the end of the year, which he called “unjustified" and added the new tax initiative, which will be discussed by the Parliament, would mean the Government would assume additional income starting in 2024.

Georgian-based financial sector companies had been slated to switch to the Estonian tax model, in which businesses - except for profit-sharing companies - pay income tax on distribution of profits instead of annual income tax, and undistributed corporate profits are tax exempt.

The PM also revealed tax benefits for individuals employed in the agriculture sector and agricultural cooperatives would be extended to 2026.