New Dynamics in State Budget Revenues: Where Is Georgia’s Tax Collection Growing — and Where Is It Falling?

In the first five months of 2025, Georgia’s state budget recorded notable progress in tax revenue collection. According to operational data from the Ministry of Finance’s Treasury, a total of 8.9 billion GEL in taxes was collected, accounting for 40% of the annual plan. This figure represents a 4% increase — or 323 million GEL — compared to the same period last year, signaling strong fiscal performance and resilience of Georgia’s economy despite ongoing global and regional uncertainties.

The main driver of budget revenue was the personal income tax, which rose by 13.5% year-over-year, totaling 3.1 billion GEL. This sharp increase reflects improvements in the labor market, a rise in formal employment, and overall economic activity. Another strong performer was the Value Added Tax (VAT), which also brought in 3.1 billion GEL, up 3.7% from the previous year — often seen as a direct indicator of domestic demand strength and broad-based economic engagement.

A more mixed picture emerges with corporate profit tax and excise tax collections. Profit tax revenues declined by 12%, while excise tax income dropped by 3%, pointing to emerging challenges. The decrease in profit tax may be attributed to lower business earnings, reduced corporate profitability, or recent tax code changes. The drop in excise revenue likely reflects decreased consumption of certain taxed goods or market shifts that negatively affected this category’s performance.

Overall, the continued upward trend in tax revenue enables the government to proceed systematically with budgeted priority projects. At the same time, the decline in select tax categories does not yet threaten financial stability, but it does call for targeted policy adjustments and deeper analysis to ensure future revenue structures are more balanced and resilient.

Going forward, the diversification of the tax base and efficient revenue management remain essential challenges for Georgia. Addressing them will be crucial to meeting current and future social and infrastructure needs, and to maintaining a stable and responsive public finance system.