Bank Of Georgia Group Regulatory News (BGEO)

London, 28 December 2022

Bank of Georgia Group PLC Announces Amendment to Current Corporate Taxation Model in Georgia

Bank of Georgia Group PLC (the "Group") announces that an amendment to the current corporate taxation model in Georgia applicable to financial institutions has been passed into law, and will become effective with regard to 2023 taxable profits. The previous taxation model, effective for 2022 results, implies a 15% tax rate charged to banks' taxable profit before tax, regardless of retention or distribution status, although this was previously expected to change on 1 January 2023 to a zero corporate tax rate on retained earnings and a 15% corporate tax rate on distributed earnings. This expected change will no longer take place, and the existing model of taxation of banks will be maintained. 

At the same time, the existing corporate tax rate for banks will be increased from 15% to 20% for 2023 taxable earnings, and dividends issued from 2023 profits and subsequent periods will no longer be taxed (existing dividend tax rate is 5%). In addition, with effect from 2023, taxable interest income and deductible Expected Credit Losses will be defined per IFRS, instead of local National Bank of Georgia regulations.

The model change will have an immediate impact on deferred tax asset and deferred tax liability balances ("deferred taxes") attributable to previously recognised temporary differences arising from prior periods. The re-measurement of deferred taxes is estimated, based on the September 2022 balance sheet, to result in a GEL 80-90 million one-off deferred income tax expense that will be recognised in the Group's 4th quarter and full year 2022 results. This impact will be finalised following the completion of the year-end 2022 accounts. Following these changes, the Group expects its effective tax rate to be approximately 14.5-16% in 2023.

Name of authorised official of issuer responsible for making notification: Nini Arshakuni, Head of Investor Relations

About Bank of Georgia Group PLC

Bank of Georgia Group PLC ("Bank of Georgia Group" or the "Group" and on the LSE: BGEO LN) is a UK incorporated holding company. The Group mainly comprises: a) retail banking and payment business (Retail Banking); and b) corporate banking and investment banking operations (Corporate and Investment Banking) in Georgia. JSC Bank of Georgia ("Bank of Georgia", "BOG", or the "Bank"), a systematically important and leading universal bank in Georgia, is the core entity of the Group. The Bank is a leader in the payments business and financial mobile application, with strong retail and corporate banking franchises. In line with our digital strategy, the Group focuses on expanding technological and advanced data analytics capabilities to offer more personalised solutions and seamless experiences to our customers. Employee empowerment, customer satisfaction, and data-driven decision-making, together with the strength of the banking franchise, are key enablers of the Group's sustainable value creation. By building on its competitive strengths and uncovering more opportunities, the Group is committed to delivering strong profitability sustainably and maximising shareholder value. The Group expects to benefit from the growth of the Georgian economy, and through both its Retail Banking and Corporate and Investment Banking operations, it aims to deliver on its strategy and its key medium-term objectives ̶ at least 20% return on average equity (ROAE) and c.10% growth of its loan book.

For further information, please visit www.bankofgeorgiagroup.com or contact:

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