One of the fundamental changes to the VAT regulations concern its scope. Prior to the reform, VAT was applicable to any economic activity which intended to provide income or compensation. From 2021, as a result of these changes, VAT started to predominantly apply to those persons that carry out a repeated economic activity, independently and in an organised manner for profit.
In addition here are some of the primary changes that have been made to the Tax Code with respect to the VAT rules:
- Irregular activities except for the supply of non-residential building are no longer considered to be taxable;
- Temporary admission of goods is no longer a taxable transaction;
- A taxable person who has a fixed institution in Georgia will be obliged to become a VAT payer upon starting a business;
- Delivery of goods free of charge will be taxed only if the relevant person has deducted VAT on these goods and will be taxed on the “cost basis” of the delivered goods/services and not at the market price;
- The transfer/use of the goods as a sample or a small gift will not be taxed;
- In addition to medical and educational activities, the delivery of services/goods directly related to it and ancillary in relation to it will be exempt from taxation;
- The principles determining the place of service is changed (reviewed in details below).
Source: mglaw.ge
