Hiring people in Georgia means two main payroll obligations: income tax on salary and contributions to the funded pension scheme. This guide summarises both from the Tax Code and the Law on Funded Pension.
Income tax on salary
A natural person’s taxable income, which includes salary, is taxed at the rate of 20% unless the Tax Code says otherwise (Article 81).
The funded pension scheme
Joining the funded pension scheme and making contributions is mandatory for employees on each salary income. It is voluntary for self-employed people and for employees who were already at or above age 60 (men) or 55 (women) when the law came into force. Contributions are financed by the employer, the employee and the State (Law on Funded Pension, Article 3).
- Employer: 2% of the taxable salary paid to the employee, at the employer’s own expense.
- Employee: 2% of the taxable salary, paid by the employer on the employee’s behalf and at the employee’s expense.
- State: 2% on the first GEL 24,000 of annual salary, 1% on the part from GEL 24,000 up to GEL 60,000, and nothing above GEL 60,000 a year.
- Self-employed person: 4% of income, plus the State contribution.
The employer pays the contribution not later than the day it submits the income declaration, and the contribution is based on that declaration. All pension settlements are in lari.
Can an employee refuse?
Employees have the right to refuse participation under the law. A special withdrawal period applies to employees who were over 40 when the law came into force, and the employer is not allowed to persuade or dissuade an employee. An employee who refuses can re-join at any time and is then treated as joined under the mandatory rule.
Foreign employees
The mandatory rule applies to employees in general. A participant whose Georgian citizenship ended or who lost the permanent residence permit can claim the value of the pension account as a lump sum; that payout is taxed under Georgian law (Article 34-1). If the person later gets citizenship or a permanent permit again, contributions become mandatory again.
Checklist for employers
- Sign a written employment contract; see the Labour Code summary.
- Calculate income tax and the pension contributions in every payroll.
- File the income declaration and pay the pension contribution on time.
- If you hire a foreigner, check the right to work, see work residence permit.
MITC runs payroll, files the declarations and calculates contributions for you. Contact us for a consultation.
Source: Tax Code of Georgia, consolidated version of 28 October 2026, Article 81; Law of Georgia on Funded Pension (matsne.gov.ge), Articles 3, 21, 22 and 34-1. Last verified: 7 November 2026. Rules and amounts can change; confirm them with MITC or the competent authority before acting.
