Georgia’s state budget did not get GEL 6.4 billion in 2024 due to tax breaks, according to the Ministry of Finance. The figure represents a GEL 500 million increase compared to 2023, when tax expenditures amounted to GEL 5.9 billion. Despite this rise, their ratio to GDP decreased from 7.3% to 7%.
Value-added tax (VAT) exemptions made up 94% of total tax expenditures, equating to roughly GEL 6 billion.
The largest VAT-related tax breaks were concentrated in several key sectors:
- Healthcare – GEL 845 million (0.92% of GDP)
- Education – GEL 808 million
- Agriculture – GEL 617 million
- Pharmaceuticals – GEL 598 million
Expenditures related to income and profit taxes reached GEL 405 million (0.44% of GDP) in 2024, marking a decrease from previous years.
- Income tax expenditure: GEL 216 million (0.24% of GDP)
- Distributed profit tax expenditure: GEL 116 million (0.13% of GDP)
The ministry attributes the decline in income tax relief to a reduction in benefits for small business owners.
According to the Finance Ministry, tax benefits are a targeted tool of government policy designed to support economic activity and social objectives. However, the agency emphasizes that expanding such incentives leads to revenue losses and requires ongoing evaluation.
The report highlights that since 2018, total tax expenditures have nearly doubled in nominal terms, though their share of GDP continues to decline as the economy expands.
