Recent tax changes planned for 2026 are clearly aimed at mobilizing additional funds for the state budget, according to Davit Papiashvili, Managing Partner of Kreston Georgia. Speaking on BMG’s Business Morning, Papiashvili identified the increase in excise taxes on tobacco products as one of the most significant fiscal changes.
Papiashvili explained that cigarettes in Georgia are subject to both excise tax and value-added tax, with the excise consisting of a fixed amount and a percentage of the market price. “From 2026, changes are planned in both components,” he said. Under the new rules, the fixed excise rate on imported cigarettes will rise from GEL 1.90 to GEL 2.75, which is an increase of 85 tetri, while the fixed rate for locally produced cigarettes will decrease to GEL 1.30, provided annual sales do not exceed 35 million packs.
According to Papiashvili, the price increase will mainly affect imported and low-priced cigarettes. “One of the motives behind this approach is to encourage local production,” he noted, adding that despite this differentiation, the changes are still likely to have a positive effect on budget revenues through higher excise collections.
Asked whether the 2026 tax amendments signal an effort to raise additional budget funds rather than broad tax reform, Papiashvili said the intention is evident. “It is clear that the main reason for the recent tax changes is the mobilization of funds in the budget,” he said, pointing out that excise taxes are often adjusted when fiscal pressures emerge. He added that weaker-than-expected budget results in the first three quarters likely contributed to the government’s decision to tighten excise policy.
