Georgia: opening an IT company in a virtual zone
Opening a company in the virtual zone of Georgia is getting a special tax status for software developers and some other firms that work in the IT sphere. The company that gets it has the right not to pay corporate tax or VAT. The benefits affect only goods and services provided to foreigners outside the country.
Advantages of a virtual zone
Georgia is interested in foreign investment, creating favorable conditions for IT companies. To stimulate the economy, the government carried out many reforms, putting Georgia on the list of the best countries for ease of doing business. Among the exciting projects is registering an IT company in the virtual zone. The advantages are as follows:
- The corporate fee is 0%. If the company works with Georgian clients and receives income from inside the country, only the income from local sources are taxed: the corporate tax is 15%, and VAT is 18%.
- VAT is 0%. Requirements include withholding and payment of income tax from the salaries of Georgian employees.
- Tax on distributed dividends is 5%.
Who can register in the virtual zone
Previously, freelancers and companies involved in IT consulting, Internet marketing, e-commerce, and cryptocurrency, could get the status. Now the rules have been tightened up, and the status is mostly given to software developers. This clause is outside the requirements, but applications from other IT niches are often rejected in practice. They can instead obtain the status of an international company (ICS), which also provides many benefits.
Thus, an IT company engaged in software development can register in the virtual zone. It must meet these requirements:
- Open a limited liability company in Georgia.
- It must be able to work with clients located outside the country. It is allowed to work with local clients, but the taxes will be at the regular rates.
- Rent a physical office where Georgian employees must work.
- Have a Georgian phone number and a local bank account.
Although Georgian laws do not require hiring local staff, the application will only be accepted if local IT people are on the team. The same goes for a physical office. There is no requirement for its presence, but you will only get the status with headquarters in the country. Also, the office must have the equipment necessary to carry out IT activities.
How to apply for the status
You can apply for registration in the virtual zone immediately after the LLC registration. This form of activity is advantageous because it has no capital requirements and no annual fees. Registering a company in Georgia in 2023 is fast, and it takes up to a week if all the documents are prepared correctly.
Important: All documents must be in the Georgian language. Any mistake can be a reason for refusal, so it is essential to complete the paperwork correctly. To reduce the risk of errors it is recommended to contact our specialists.
You can apply for the status online. The regulator considers the task for about a month. Then it may ask to provide additional evidence of your activities, explain the company's tasks, its features, show contracts with local staff, etc. Consideration of additional documents may also take a month.
How to open a business in a virtual zone fast
Contact IT-OFFSHORE for quick registration of a Georgia virtual zone business.