The October 2026 amendment
Georgia’s Revenue Service reports that an amendment effective October 16, 2026 extended the preferential period under Article 309 of the Tax Code. The relevant provision concerns VAT exemption with the right of deduction for the supply of immovable property and associated construction and installation services. The period was extended from January 1, 2029, to January 1, 2033.
This is not merely an administrative clarification. It changes the statutory time horizon for projects that depend on the availability of the preferential VAT treatment. Developers and investors can now assess qualifying projects against a longer period, although eligibility must still be tested against the precise statutory conditions.
Why the right of deduction matters
A normal VAT exemption may prevent a business from recovering input VAT. An exemption with the right of deduction is materially different: it can allow qualifying output transactions to remain VAT-exempt while preserving recovery of eligible input VAT. That difference can affect project margins, construction budgets, and financing models.
For example, a developer constructing qualifying immovable property may incur substantial VAT on design, materials, engineering, and construction services. If the project satisfies the statutory requirements for exemption with deduction, the ability to recover eligible input VAT can reduce the effective cost of development.
Action points for businesses
- Identify whether each project involves a qualifying supply of immovable property.
- Separate construction and installation costs from non-qualifying consulting, marketing, financing, or management costs.
- Review contracts to determine whether suppliers charge VAT and whether the amounts are recoverable.
- Preserve permits, technical documentation, contracts, invoices, and evidence supporting eligibility.
- Reforecast projects whose completion or supply dates fall between 2029 and 2033.
- Obtain a written technical review before relying on the extension in a large transaction.
Cross-border and foreign-investor considerations
Foreign investors should not assume that a property investment automatically qualifies. The VAT result may depend on the legal form of the transaction, the nature of the property, the timing of supply, and whether the construction services are directly connected to the qualifying activity. Financing documents and investor returns should be modeled under both qualifying and non-qualifying scenarios.
Compliance discipline
The extension improves planning certainty, but it does not remove documentation requirements. Businesses should maintain a transaction file showing why the exemption applies and how input VAT was allocated. Where a project includes both qualifying and non-qualifying activities, a defensible allocation methodology is essential. The longer period should therefore be treated as a planning opportunity—not as a blanket exemption for every real-estate transaction.