Georgia is actively developing the IT sector and provides foreign companies with attractive conditions for doing business. One of such tools is the status of “Virtual Zone Person” (VZP), which provides significant tax benefits.

What is virtual zone status (VZP)?

The VZP status in Georgia is granted to IT companies that are engaged in software development and provide their services to foreign clients. This allows companies to obtain exemption from a number of taxes, stimulating the development of technological business in the country.

Tax benefits for VZP

Companies with VZP status in Georgia can benefit from the following tax advantages:

• 0% corporate income tax provided that the profit is derived from the provision of IT services to foreign clients.
• 0% VAT on exported IT services.
• 5% tax on dividends when distributed.
• 20% income tax on employees (standard rate in Georgia).

Conditions for obtaining VZP status

To qualify for VZP status, a company must meet the following requirements:

• IT activities: The company must be engaged in software development or provision of services related to the creation of IT products.
• Economic presence in Georgia: Having an office and employees in Georgia is a prerequisite for obtaining and maintaining VZP status.
• Revenue from foreign clients: The main part of the company's revenue should come from clients located outside Georgia.

Important points

• Activity limitations: Not all IT services qualify for tax exemption. For example, website maintenance services or IT consulting services may not qualify.
• Tax audits: Georgian tax authorities may conduct audits to verify whether a company qualifies for VZP status.
• Loss of status: In case of non-compliance, the company may lose VZP status and lose tax exemptions.

The status of a virtual zone in Georgia provides IT companies with significant tax advantages, facilitating the development of technology business. However, to successfully obtain and maintain this status, a number of requirements must be met, including having a real economic presence in the country.

📞 Ready to open an IT company in Georgia and take advantage of tax benefits? Contact us for advice and assistance in business registration.