Nodar Khaduri, Minister of Finance of Georgia and Yoo Il Ho, Deputy Prime Minister and Minister of Strategy and Finance of the Republic of Korea signed a double taxation treaty on 31 March 2016. Following appropriate actions, the treaty has been enacted and is in force since 17 Nov 2016. It will generally apply from 1st of January, 2017.
It is mainly aimed at facilitating the intensified economic cooperation and inflow of investments, along with the avoidance of double taxation, which will be achieved through the introduction of international standards for the exchange of information for tax purposes.
The agreement is based on the role model developed by the Organization of Economic Cooperation and Development (OECD) and defines the principles of taxation between the countries. In terms of withholding tax rates, it stipulates a 5% (assuming at least 10% participation) or 10% withholding tax rate on dividends (in all other cases) as well as 10% withholding tax rate on interest and royalties.
Republic of Korea is one of the significant economic partners of Georgia. In line with the data released by the National Statistics Office of Georgia (GeoStat), the inflow of Foreign Direct Investments (FDI) from the Republic of Korea into Georgia is increasing from the Republic of Korea and FDI volumes in 2015-2016 (Q1 and Q2 of 2016) have reached 61.5 MLN USD.
The treaty concluded with the Republic of Korea is the latest one in a list of 53 double taxation agreements signed between Georgia and other countries.
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