It is not a novelty that innovations in a modern world are mostly stimulated by advances in information technology industry. Thus, many countries are striving to establish various facilitating programs to incentivize the IT sector. In this regard, government of Georgia has enacted various initiatives to promote the production of IT related services and products.
There are two basic opportunities in the country, that could result in a substantial cut of operational costs in case of conducting IT related business in Georgia.
You can obtain either an International or an IT Zone status for your company.
There are provided various fiscal incentives for such companies, which are shown in the table below, however, there are different requirements for obtaining any of them.
|Target Audience||Key Offerings||Tax Benefits|
|IT Software Developers||Virtual Zone Company||Only applicable tax – 5% Tax on Dividend|
|IT and Sea/Ship related Service Providers||International Status company||Only applicable tax – 5% on personal & corporate income|
Virtual IT Zone
Virtual Zone persons (which is a legal person engaged in IT activities and holding appropriate status), are exempt from any special regulations and they do not need any type of licenses, permits and other regulatory documents to conduct their activities.
Though, the only corporate tax applicable for virtual zone entities is 5% on dividend withdrawal, still on a personal level, personal income tax equals 20%. However, it should be noted, that virtual zone companies are not allowed to provide services within Georgia. Also, except for the company’s director, there is no legal duty to keep employed workers in Georgia.
The status of a virtual zone person is granted to an interested person no later than 10 working days after submitting an application for the status.
International Status Company
To benefit from the initiative regarding international status companies, one has to be a Georgian enterprise or a representative of a non-resident entity, which complies with stated requirements.
The very first check is the industry, which limits the stakeholders to two main directions:
- IT related activities
- Sea/Ship related activities (Find detailed list of activities below)
It should be underlined, that company must have at least two years of experience in carrying out the permitted activities, as well as the organization seeking an international company status must engage in activities permitted from Georgia and the company must prove that it has adequate capacity of human resources to achieve the goals. The eligibility check by the Revenue Service of Georgia takes only 10 days.
NOTE: An International Company has the right to earn income from sources other than its approved activity, but such income should not exceed 2% of its permitted activity’s revenue.