IT Virtual Zone Companies in Georgia: How to Pay Only 5% Tax
Georgia offers a unique tax regime for companies operating in the IT sector, known as the IT Virtual Zone. This special status provides IT companies with significant tax advantages, including a corporate income tax rate of just 5% on distributed profits. For both local and international IT businesses, this makes Georgia an incredibly attractive destination for establishing operations. In this article, we will explore how IT Virtual Zone companies work, the tax benefits, and how Georgia Business and Residential Law can help you take full advantage of this regime.
What Is the IT Virtual Zone?
The IT Virtual Zone in Georgia is a special tax regime specifically designed to attract companies in the technology and software sectors. It offers an extremely competitive tax structure for businesses providing IT services to international markets. Companies that qualify for IT Virtual Zone status can enjoy:
- Corporate income tax exemptions for profits earned from foreign clients.
- A flat 5% tax rate on distributed profits (similar to Georgia’s broader corporate tax structure, but with significant additional benefits).
- No VAT (Value-Added Tax) on services provided to international clients.
This makes it an ideal environment for companies involved in software development, digital solutions, and IT consultancy, especially those serving clients outside of Georgia.
Key Benefits of IT Virtual Zone Companies
Minimal Corporate Income Tax
Companies that qualify for the IT Virtual Zone can significantly reduce their corporate tax burden. Only 5% tax is applied when profits are distributed to shareholders, and profits that are reinvested are not taxed.
No VAT on International Services
One of the most appealing benefits is the exemption from VAT. For companies providing services to international clients, this can lead to substantial savings.
Simple and Fast Registration
Setting up an IT Virtual Zone company is a straightforward process. The application can be submitted online, and approval is usually granted within a few weeks, making it easy for businesses to get started quickly.
Global Operations with Local Benefits
Companies can operate internationally, providing services to clients worldwide, while benefiting from Georgia’s low-tax environment.
Who Qualifies for the IT Virtual Zone?
To qualify for the IT Virtual Zone status, your business must meet the following criteria:
- The company must provide IT-related services, such as software development, IT consulting, or digital product creation.
- The majority of the company’s clients must be outside of Georgia, as the tax benefits apply primarily to international services.
Although the criteria are specific, many companies in the tech and digital sectors can qualify for this status. At Georgia Business and Residential Law, we help businesses assess whether they meet the eligibility requirements and guide them through the application process.
How to Register as an IT Virtual Zone Company
Registering an IT Virtual Zone company involves a simple process:
Company Registration
First, your company must be registered as a legal entity in Georgia. This can be done through Georgia’s Public Registry, and at Georgia Business and Residential Law, we ensure all necessary documents are prepared and filed correctly.
Apply for IT Virtual Zone Status
Once the company is registered, you need to apply for IT Virtual Zone status through Georgia’s Ministry of Finance. The application process is online, and we assist in preparing and submitting the application, ensuring that all criteria are met.
Receive IT Virtual Zone Certificate
Upon approval, your company will receive an IT Virtual Zone certificate, which grants access to the tax benefits associated with the status.
How Georgia Business and Residential Law Can Help
Registering an IT Virtual Zone company and ensuring compliance with Georgian tax laws can be complex. At Georgia Business and Residential Law, we offer comprehensive assistance to ensure a smooth process. Our services include:
- Business Registration: We help you register your company in Georgia and ensure that all legal documents are in order.
- IT Virtual Zone Application: Our team guides you through the application process for IT Virtual Zone status, ensuring all documentation is complete and accurate.
- Tax Optimization: We provide expert tax advice to help you maximize the benefits of Georgia’s tax system and ensure full compliance with local regulations.
Conclusion
Georgia’s IT Virtual Zone offers an unbeatable opportunity for IT companies to benefit from some of the lowest tax rates in the world. With minimal corporate tax and no VAT on international services, businesses can maximize profits while operating in a globally connected environment. At Georgia Business and Residential Law, we provide all the support you need to establish your IT company and take full advantage of Georgia’s favorable tax regime. Contact us today to learn more about how we can help you register your IT Virtual Zone company in Georgia.