Changes to the financial sector taxation model in Georgia

TBC Bank Group PLC ("TBC PLC") announces that today the amendment to the current corporate taxation model in Georgia applicable to financial institutions has been enacted, which will be applicable from 2023.

Under the new model, starting from 2023, the financial sector will no longer switch to the Estonian tax model, which was expected to exempt banks from paying corporate taxes on retained earnings and required only a payment of 15% corporate tax rate on distributed earnings. 

The model change will have an immediate impact on deferred tax asset and deferred tax liability balances and a corresponding income tax effect, attributable to previously recognised temporary differences between financial and tax accounting balances arising from previous periods. The impact also includes potential provisions for one-off tax charges, which are likely to be required by the Georgia Tax Authorities as a one-off reimbursement for interest income deductions applied under a previously enacted law. The total potential one-off effect on the group's earnings is estimated to be GEL 100-110 million based on 30 September 2022 balance sheet and will be recognised in the group's fourth quarter and full-year 2022 results. The amount of the impact will be re-confirmed with the publication of the full-year 2022 financial results.

Also, with effect from 2023, the existing corporate tax rate for banks will be increased from 15% to 20%, while dividends will no longer be taxed with 5% dividend tax. As a result of these changes, the group's effective tax rate is expected to be around 14-16% in 2023.

For further enquiries, please contact:

Director of Investor Relations and International Media

Andrew Keeley

Or

Head of Investor Relations

Anna Romelashvili

[email protected]

About TBC Bank Group PLC ("TBC PLC")

TBC Bank Group PLC ("TBC PLC") is a public limited company registered in England and Wales. TBC PLC is the parent company of JSC TBC Bank ("TBC Bank") and a group of companies that principally operate in Georgia in the financial sector and other closely related fields. TBC PLC also recently expanded its operations into Uzbekistan. TBC PLC is listed on the London Stock Exchange under the symbol TBCG and is a constituent of FTSE 250 Index. It is also a member of the FTSE4Good Index Series and the MSCI United Kingdom Small Cap Index.

TBC Bank, together with its subsidiaries, is a leading universal banking group in Georgia, with a total market share of 38.8% of customer loans and 40.0% of customer deposits as of 30 September 2022, according to data published by the National Bank of Georgia.