In Georgia, as a general rule, only a VAT-registered business that uses its purchases for deductible business transactions is entitled to deduct input VAT. For each purchase, the VAT status, invoice recipient, and actual purpose must therefore be documented. As a general rule, proof in the form of a proper VAT invoice issued by a VAT-registered supplier is required. An ordinary commercial invoice does not automatically replace this tax invoice. VAT on incorporation costs is not deductible merely because the expense benefits the future business. The registration date, the recipient named on the invoice, subsequent business use, and appropriate documentation also matter. Each business purchase must be assigned to a specific type of transaction or a substantiated mixed-use purpose. This determines whether input VAT is fully, partially, or not at all deductible. Deduction is prohibited in particular for private or non-business purposes and for transactions that do not carry the right to deduct input VAT. A lack of registration, inappropriate documentation, or an incorrectly named invoice recipient can also prevent an input VAT deduction.
Planning Input VAT Deductions Before Starting a Business in Georgia
Input VAT deductions for planned business purchases in Georgia depend on VAT registration, actual business use, and appropriate tax documentation. Incorporation costs and mixed-use purchases must therefore be classified by invoice recipient and intended type of transaction before the business starts.
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