The Estonian-style profit tax model, in force in Georgia since 2017 under the relevant provisions of the Tax Code, replaced the traditional accrual-based corporate tax with a distribution-based system. Profit is not taxed as it is earned — it is taxed only when it is distributed, at a rate of 15% calculated on a gross-up basis (effectively 15/85 of the net distribution).
"Distribution" under the Code is defined broadly and extends beyond formal dividends to cover a range of deemed distributions: certain loans to related parties, non-business expenses, and representative expenses above the statutory threshold can all be reclassified by the Revenue Service as taxable distributions during an audit. This is the area where most disputes with RS.ge originate, since the classification often depends on documentation quality rather than the underlying commercial intent.
For companies filing under this regime, the monthly profit tax return is only required in periods where a taxable distribution actually occurred — there is no obligation to file a "nil" monthly declaration purely because no distribution took place, which is a frequent point of confusion for newly registered companies. Getting the underlying bookkeeping structured to clearly separate business expenses from anything that could be reclassified as a distribution is the single most effective way to reduce audit exposure under this model.