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Key Changes in the November 2025 Amendment
In November 2025 the Revenue Service of Georgia has issued the changes to the 2024 regulation, according to which the approaches of the Revenue Service in the taxation of uncollectible receivables and paid advances are partially changing. According to the 2024 guidance, if receivables are not repaid (collected) within a "reasonable" period of time or goods or services are not provided in exchange for advances paid to suppliers within a "reasonable" period of time, in such case, the uncollected amount / unreceived goods / services would be considered as a salary paid to the director of the company and would be subject to income tax taxation.
The 2024 regulation left several critical questions unanswered. Firstly, it did not clarify if this approach applies to both non-resident individuals and Georgian resident individuals and legal entities. Additionally, the regulation failed to provide a clear explanation of how the "reasonable period" for receivables should be determined. Finally, it remained unclear whether this regulation would have a retrospective effect.
In the November 2025 amendment makes a significant change by removing any reference to resident individuals. Under the new language, receivables not collected within a reasonable period will be taxed as director's salary only if such receivables (or advance payments) exist in relation to a non-resident person, and only when the following conditions are met:
a) a reasonable period has elapsed since the receivable arose.
b) by the date of tax audit start day the payment of receivables is not confirmed (in case of an advance payment made abroad, the supply of goods/services is not confirmed).
c) return of the delivered goods will not be confirmed until the tax audit is completed.
Impact of the New Amendment
Accordingly, per new amendment the uncollected receivables and failure to receive goods/services for the advances paid will be reviewed as salary paid to the directors only in relationship to non-residents.
Remaining Ambiguity
However, the "reasonable" period regarding this regulation is still unspecified, which allows different subjective approaches by revenue service auditors during tax audits.
How Eurofast Can Help
The latest amendments to Georgia's tax rules bring clarity, but also introduce new judgment areas, particularly around uncollectible receivables, advances, and what qualifies as a "reasonable" timeframe. These grey zones can quickly turn into audit risks, especially in cross-border transactions with non-residents.
Eurofast helps companies stay ahead by identifying potential exposure early, strengthening documentation, and preparing for tax audits with confidence. With local expertise and hands-on support, we help businesses navigate the changes and defend their tax position under Georgia's evolving regulatory approach.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
