Income Tax Treaty between Georgia and Moldova

On 31 January 2018, the Moldovan Cabinet approved the income tax treaty with Georgia. The treaty, signed 29 November 2017, is the first of its kind concluded between the two countries and will enter into force after the ratification instruments are exchanged.

The Treaty was signed following the Georgia – Moldova Business Forum held in Tbilisi, in April 2017, where participants explored business opportunities between the 2 countries in the agriculture sector, consulting, textile, information technologies, tourism sector and development sector, among others.

The parties signed a convention on the avoidance of double taxation and prevention of tax evasion in regards to income tax, in order to support the development of cooperation between the business communities of the two countries.

The treaty covers Georgian profit tax and income tax, as well as Moldovan income tax. In terms of withholding tax rates, the maximum rates of 5% were established on dividends, interests and royalties. Anti-treaty shopping provisions have been implemented in those articles as well.

A permanent establishment is deemed to include a building site or construction/installation project in duration of more than 6 months in a twelve month period. The same applies to the provision of services (including consultancy) lasting more than 3 months in a twelve month period.

Both countries will apply the credit method and the exemption-with-progression method for the elimination of double taxation.

For more information, feel free to contact:

Irina Lopatina
Eurofast Global Georgia

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