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Georgia tax guide

Taxes for IT Businesses in Georgia: What to Consider in 2026

Small Business, Virtual Zone and International Company regimes can offer substantial benefits—but only when the company’s contracts, people and operations match the legal requirements.

Legislation checked on 21 October 2026

Georgia offers several preferential tax regimes for technology professionals and companies. The best-known options are Small Business Status, Virtual Zone Person status and International Company status.

No status makes every type of IT income automatically eligible for preferential treatment. The result depends on the services provided, where the work is performed, who creates the software, how the contracts are drafted, where the customer is located and how profits are distributed.

Key point: headline rates do not replace VAT, payroll, withholding, accounting, reporting or immigration obligations.

The three main tax regimes

The regimes are designed for different legal forms and business models. Comparing rates without checking eligibility can produce the wrong result.

Regime	Intended for	Principal benefit
Small Business	Individual entrepreneurs	1% income tax on qualifying turnover
Virtual Zone Person	Georgian legal entities creating IT products in Georgia for foreign customers	Profit-tax exemption for qualifying profit
International Company	Established Georgian enterprises conducting permitted activities in Georgia	5% profit tax, 5% employee income tax and 0% dividend withholding

Small Business Status

Small Business Status may be granted to an entrepreneur natural person registered in Georgia. Qualifying Georgian-source income is generally taxed at 1%.

1%Standard tax rate on qualifying income

GEL 500,000Main annual gross-income threshold

3%Rate from the start of the month in which the threshold is exceeded through year-end

The status may be revoked if gross income exceeds GEL 500,000 in each of two consecutive calendar years.

What IT professionals should check

Not every payment received by an individual entrepreneur qualifies for the 1% regime. Georgian legislation identifies prohibited activities and categories of income that remain outside the special treatment.

The classification of the actual work is particularly important. Software development, technical implementation and professional consulting may receive different treatment even when the parties informally describe all of them as “IT services.”

Substance matters: the contract, invoices, deliverables and actual working process should correspond to each other.

Additional obligations

VAT registration and reporting, where applicable;
property tax;
ordinary taxation of income outside the special regime;
supporting documents and a special income record book;
monthly declarations and payments;
source-of-income analysis for work performed from Georgia.

The status normally becomes effective from the month following the month in which it is granted. Earlier income should be analysed separately.

Read the detailed comparison of Georgian IT tax regimes →

Virtual Zone Person

Virtual Zone Person status is available to a Georgian legal entity engaged in qualifying information-technology activities. The definition focuses on studying, supporting, developing, designing, producing and implementing computer information systems that result in software products.

Profit-tax benefit

The principal benefit is an exemption from Georgian profit tax for qualifying profit earned from supplying outside Georgia information technologies developed by the Virtual Zone Person.

This is not a general exemption for all company income. Domestic income and revenue from activities outside the qualifying IT scope may be taxed under the ordinary rules.

To apply the benefit, the company should be able to demonstrate that:

the product or service falls within the statutory IT definition;

the software or IT product was developed by the Georgian legal entity;

the relevant development activity was genuinely conducted in Georgia;

the supply was made outside Georgia;

exempt income and related expenses can be distinguished from other activities.

Substance and supporting evidence

A status certificate alone is not enough to prove entitlement to the benefit for every transaction. The company should document where and by whom its products were created.

employment and contractor agreements;
payroll and payment records;
descriptions of employees’ and contractors’ functions;
project-management, source-code and development records;
technical specifications, deliverables and acceptance documents;
intellectual-property assignments.

If all developers work outside Georgia, demonstrating that a product was developed in Georgia may be difficult. If the director personally performs development or service work, the operational role and remuneration should be documented; dividends should not substitute for salary for work actually performed.

Other taxes still apply

20% payroll taxOrdinary employee salary income

5% dividend withholdingGeneral rule for qualifying recipients

Up to 1% property taxOn qualifying taxable company property

VAT, withholding tax on certain non-resident payments, reverse-charge VAT, accounting and reporting obligations may also apply.

Foreign customers do not automatically mean “0% VAT”

For many business-to-business services, the place of supply is where the business customer is established. If the customer is outside Georgia and no exception applies, the service may be treated as supplied outside Georgia—not as a Georgian transaction taxed at 0%.

The result can differ for consumers, electronically supplied services, fixed establishments, licensing, related parties and services used in Georgia.

Domestic taxable supplies are generally subject to 18% VAT. Mandatory registration usually arises when Georgian VAT-taxable transactions exceed GEL 100,000 during any 12 consecutive calendar months. Foreign-client revenue must be classified before calculating the threshold.

International Company Status

International Company status is intended for established Georgian enterprises carrying out activities permitted by Government Ordinance No. 619.

Permitted IT activities include software publishing, computer programming and consulting, computer-facilities management, digital products, website development, hosting, remote maintenance and system administration.

Eligibility and substance

The applicant, a qualifying non-resident enterprise represented by it, or certain majority corporate owners must generally have at least two years of experience in the relevant permitted activity.

The Georgian enterprise must conduct its principal income-generating activity in Georgia and maintain appropriately qualified personnel and adequate operating expenditure in the country.

Tax benefits

5%Profit tax

5%Income tax on employee salaries

0%Dividend withholding tax

ExemptQualifying property used in permitted activities, excluding land

The company may also reduce taxable distributed profit by qualifying Georgian expenditure, including salaries paid to Georgian citizens and qualifying research, design and experimental-development costs. Each deduction must be documented.

2% limit: revenue outside the permitted activities may generally be received only when it does not exceed 2% of revenue from permitted activities during the calendar year. A breach or loss of required substance may lead to revocation and retroactive tax exposure.

Double-taxation treaties

Georgia currently has 58 double-taxation treaties in force. Treaty relief is not automatic: the analysis depends on tax residence, beneficial ownership, permanent establishment, the legal nature of the payment and supporting documents.

Russia is not included in Georgia’s current official list of treaties in force.

Contracts, intellectual property and remote teams

For an IT business, tax compliance begins with the contracts. Customer agreements should clearly identify:

the product or service supplied and where work is performed;
who creates and owns the intellectual property;
whether the customer receives ownership, a licence or access to a service;
how work is accepted and documented;
which payments relate to development, support, consulting or licensing.

The distinction between a service fee and a royalty can affect Georgian withholding tax and treaty treatment. Employee and contractor agreements should contain appropriate intellectual-property provisions.

Employees working from other countries

A remote employee or contractor can create payroll, social-security, labour-law, permanent-establishment or corporate-tax obligations in the country where that person works.

Foreign nationals physically working in Georgia may also need an individual right to work and an appropriate immigration status under the rules applicable from 2026.

Employing foreign workers in Georgia →
Work permit guide →

Payments to foreign suppliers

Payments for foreign software, licences, cloud services, advertising, consulting and contractor services should be reviewed before payment. They may create withholding-tax, reverse-charge VAT, residence-certificate or transfer-pricing obligations.

An invoice described simply as “software services” may contain legally different elements—licensing, support, development and cloud access—that require separate analysis.

Accounting and tax reporting

Preferential status does not eliminate routine compliance. Accounting records should reflect the company’s actual activity rather than only the wording used when the business was registered.

properly drafted agreements, invoices and acceptance documents;
payroll and payment records;
separate records for qualifying and non-qualifying income;
evidence showing where development work was performed;
VAT and withholding-tax support;
transfer-pricing documentation where relevant;
financial statements and other mandatory reports.

Penalties for non-compliance

The penalty figures in the original 2022 article are no longer current. Under the present Tax Code:

Late filingUp to two months: 5% of payable tax for each overdue month, capped at 30%. A delay exceeding two months generally carries a 10% fine.

Late paymentPenalty interest is generally 0.05% of the outstanding liability for each overdue day.

UnderstatementA fine of 10%, 25% or 50% of the understated tax may apply depending on the size and circumstances.

More serious cases may create additional administrative or criminal exposure.

Which regime should an IT business choose?

Small Business Status can suit an individual specialist with qualifying income. Virtual Zone Person status may fit a Georgian company genuinely developing software in Georgia for foreign customers. International Company status is designed for a larger or more established operation with sufficient experience, employees and substance.

Before choosing, review:

the precise nature of the services and deliverables;
where the work is actually performed;
customer location and status;
projected turnover and payroll;
ownership of intellectual property;
payments to foreign contractors and suppliers;
VAT, withholding and treaty exposure;
employment and immigration requirements;
the administrative cost of maintaining the status.

Official sources

This publication provides general legal and tax information and does not constitute individual advice. Tax treatment depends on the facts of each transaction. Legislation and administrative practice may change. Legislation checked on 21 October 2026.

Choose the tax regime that fits the real business

JUST Advisors can review your operations and contracts, compare the available regimes, obtain the relevant status and organise ongoing accounting and tax compliance.

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