The review starts with the company’s VAT status and the actual use of the purchase. A company that is not registered as a VAT payer generally cannot claim the standard input VAT deduction merely because VAT is shown. Expenses for private purposes or for another person do not fall within the deductible business sphere. The same generally applies to input services used for transactions exempt without the right to deduct input VAT. In the case of mixed use, only the portion deductible under the statutory rules should be claimed; joint use does not automatically result in a complete exclusion. A commercial invoice, proof of payment, or tax amount shown by an unregistered supplier does not replace a proper tax invoice. If the invoice is addressed to a founder personally or to another company, the input VAT cannot automatically be transferred to the company formed later. An unclear description of the service or a missing connection to the actual business transaction can also prevent proof of the right to deduct. Non-deductible VAT is included in expenses or acquisition costs in the calculation rather than treated as an input VAT receivable. For each exclusion, document the reason, amount involved, purpose of use, supporting documents, and any possibility of partial deduction.
Exclusions from input VAT deduction for planned business expenses in Georgia
Input VAT is excluded in Georgia in particular when an expense serves private or non-business purposes, or transactions without a right to deduct input VAT. A lack of VAT registration, an unsuitable document, or an incorrectly named invoice recipient can also prevent the deduction.
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