It can be difficult to fully grasp what’s expected of your company when employing workers overseas. Conducting payroll in Georgia has many benefits and is certainly less complex compared to other foreign countries — though it’s still essential you understand the differences.
Hiring a payroll company to run payroll for you in Georgia is a great way to fast-track the process and maintain proper protocol. In just a few simple steps, you can easily onboard any number of employees outside of the county you’re based in.
What does the payroll process in Georgia involve?
The good news is that Georgia’s tax codes and regulations have been simplified to make hiring and managing employees easier. Nevertheless, there are some non-negotiable steps involved with your payroll system in Georgia.
Defining your payroll policy
These policies define to an employee how, when and how much they will be paid and define any benefits which they may receive from working for you.
Gross pay for an employee or company is the net amount they make before calculating any deductions. It is often calculated by multiplying hourly wage by hours worked, accounting for any overtime.
You’ll be aware of overtime pay from your company’s home country. But in Georgia, it’s worth noting that the number of hours before overtime kicks in fluctuates based on the employee’s age.
Georgian labor law dictates that employees must be paid once a month. If a company fails to do so, they are obliged to pay their employees 0.07% of the withheld amount for each day it is late.
Taxes in Georgia are calculated on 6 base parameters: Corporate Profit Tax, Value Added Tax, Excise Tax, Personal Income Tax, Import Tax, and Property Tax. Familiarize yourself with these as they differ greatly from the US tax system!
Keeping accurate and detailed records is essential, as this protects you from any relevant legal repercussions. That’s true for international payroll as well as domestic. You’ll need to keep track of taxes paid over Georgia’s six tax tiers, and the monthly wage paid out to employees.
Got some questions about HR and payroll in Georgia? The Skuad team can help you out.
Your one-stop guide for payroll in Georgia: the details
The above responsibilities are more or less in line with what you’d expect from payroll anywhere in the world. There’s always tax to pay and employees need compensation. But just how much tax should you budget for when hiring in Georgia and what else do you need to know to get started?
Currency in Georgia
The national currency of Georgia is the Lari, equal to 34￠US, and is shown as ₾ or GEL.
Rather than cents, one Georgian Lari is divided into 100 tetri but may be informally referred to a kapiki. This may help to prevent any confusion when communicating with Georgian employees.
The vast majority of Georgian employees will want to be paid in Lari. Speak to your payroll company about getting the best exchange rate.
Minimum wage in Georgia
Georgia has a country-wide government-mandated minimum wage. Employers who fail to meet this mandate may face repercussions from the Georgian government.
The minimum wage in Georgia is 115 Georgian Lari ($48) per month for public employees and 20 Georgian Lari ($8) per month for private-sector employees.
Getting a business registered in Georgia
All businesses operating in Georgia must submit either a Charter or a Shareholders’ Agreement to the National Agency of the Public Registry. These documents are only considered valid when they have been translated, completed with Articles of Association and Bylaws, and legalized.
To receive official tax information, companies will also need to register with the Revenue Service in Georgia. Most companies do not need a business license to operate in Georgia.
The US has ‘at-will employment’, meaning that employers have complete authority in terminating an employee without notice. Employment regulations in Georgia are different, requiring a 30-day notice period instead.
This 30-day period is required whether it is the employer or the employee who decides to terminate the employment and a written notice must be provided to the other party.
Payroll statutory requirements in Georgia also mean that if it’s the employer who terminates the contract, then the worker is entitled to receive at least one month’s salary as remuneration within 30 days of the contract ending.
Taxes to know for payroll and beyond
As we mentioned before, taxes in Georgia are based on 6 flat rates. These are:
- Personal Income Tax. This is a flat 20% which must be paid by both Georgian citizens and expats. These must be filed by the employer rather than the employee.
- Value Added Tax (VAT). Business operations conducted in Georgia, excluding exports, medical care and education, are charged 18% VAT if their turnover is over ₾10, 000.
- Corporate Profit Tax. As of 2017, corporate profit tax is only applicable for companies who distribute profits among its shareholders, and totals 15% of profit.
- Excise Tax. This only applies to luxury goods or harmful substances, though there are exceptions specified in the Ministry of Finance of Georgia.
- Import Tax. Most goods are not susceptible to import tax, though certain goods that are produced in Georgia may be taxed at a rate of 5% or 12%.
- Property Tax. Property tax only varies from 0-1% and is calculated based on total family revenue and the value of non-land property.
While it’s not strictly a tax, it is worth noting that employers are expected to pay a 2% contribution each month toward a Georgian employee’s pension.
Important payroll laws
Georgia has three laws applicable to payroll:
- Tax Code of Georgia. This regulates the rules around meeting tax liabilities and the legal status of taxpayers and agencies, as well as procedures around breaking tax law.
- Labor Code of Georgia. This regulates relations regarding and associated with employment.
- Law of Public Service. This manages issues directly regarding public servants.
Employees working in Georgia are entitled to at least 24 working days of paid leave in addition to 15 calendar days of unpaid leave over the course of a year.
Employees can request leave for pregnancy, childbirth, and child care of up to 730 calendar days, 183 of which are payable. 200 calendar days are payable in the case of multiple births or birthing complications.
Adoption of an infant younger than 12 months entitles an employee to take 550 days of leave from the day of birth, of which 90 calendar days are paid.
The state budget compensates leave for pregnancy, childbirth, and childcare up to a total amount of ₾1,000. Any employee may additionally take up to two weeks of unpaid leave over the course of each year to look after a child under the age of 5.
Employers in Georgia must fully compensate employees for any incurred expenses associated with business trips. Provided the trip does not exceed a total of 45 days per year, the employment conditions of the contract are not considered to have changed.
Request a demo with Skuad right away and see just how fast we can get you up and running with payroll in Georgia.
Outsourcing payroll in Georgia: what are your options?
Okay, so now you know what you need to know about payroll in Georgia. Next, let’s look at your options for getting started.
Your first option would be to open a legal entity in Georgia and hire your staff from there. This wins points for being a long-term solution, but it’s also very time-consuming and budget training too. So we’ll pass.
Second, you could hire a local payroll company in Georgia to look at your local team. This is a good option as they’ll know the Georgian rules, regulations, and employee expectations. And while they’ll be experts at payroll in Georgia… that’s not the only place your company has staff!
So that brings us to option three: Skuad — the experts of employee management and payroll across the globe.
With Skuad as a partner, you no longer need multiple HR payroll partners across different countries. Instead, you’ll have ultimate payment and withdrawal flexibility to pay and retain top talent wherever you want to hire them. Skuad provides optimal exchange rates, stays up to date with regulations, and provides you with a single dashboard where you can view and analyze global payroll data.
How do I get started?
Getting started with Skuad is easy and efficient. It also costs just a fraction of what you’d pay out for multiple payroll operations or establishing local legal entities for yourself. Forget about long timelines and big budgets, Skuad will get you set up to start hiring and paying employees in Georgia today!
See how Skuad simplifies remote hiring by booking a demo now. Georgia is just one of the 160+ countries we operate in, so feel free to throw us a challenge!