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Sole proprietor-small entrepreneur VS virtual zone person

What is the best way to conduct an IT business in Georgia?
Anna Davidson, Founder and Managing Partner of JUST Advisors
August 9, 2019
If you are a Specialist in the field of IT technologies, including studying, supporting, developing, designing, manufacturing and implementing computer information systems or conducting any other commercial activity related to IT and your clients are NOT residents of Georgia, we remind you that you can conduct business in a general manner or register your a company in a virtual zone is a special preferential zone created in 2011 exclusively for companies working in the field of IT technologies.
We propose to compare these two options for doing IT business by key indicators

Company registration

The tax regime

So, if you plan to work independently without hired Employees and at the same time:

• Your income per year will not exceed the amount equivalent to 100,000 GEL (today slightly less than 30,000 USD), it is advisable to conduct business as an individual entrepreneur with the status of a small business entity.

Your tax in this case will be 1% of the income received.

  • Your income per year will exceed the amount equivalent to 100,000 GEL (today a little less than 30,000 USD), it is advisable to conduct business through a company registered in the virtual zone of Georgia.
Your taxes in this case will amount to 5% of the profit received (when distributing profits to dividends), but you will be able to save 18% on VAT, which you would have to pay in a general manner.

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MARIA GUSEINOVA
Leading Manager of Commercial Department