5 Things You Didn’t Know About Georgia’s Tax System
- Tinatin Tolordava
- 14 hours ago
- 8 min read
Table of contents
Georgia’s Tax System Is Simpler Than You Think
Most people hear about Georgia because of its scenery, wine, or fast-growing tech scene. But talk to anyone who has lived here, launched a business, freelanced, or relocated remotely, and you will hear the same thing every time:Georgia’s tax system is one of the most surprisingly friendly frameworks anywhere.
The rules are simple, the filing process is fast, and you don’t get buried in endless paperwork. And for small businesses, tech companies, freelancers, and expats, Georgia offers advantages that many high-tax countries simply cannot match.
Here are five things most people don’t know about Georgia’s tax system, and why these details matter whether you are considering relocation, starting a company, or just exploring options for a more flexible financial life.
0% Corporate Tax on Reinvested Profits
One of the biggest surprises for founders is that Georgia effectively offers a 0% corporate tax rate as long as a company reinvests its profits. Income earned by a Georgian company is not taxed when it arrives. It is taxed only when the company chooses to distribute it to shareholders.
This means:
If your company earns revenue and keeps it inside the business, you pay 0% corporate tax.
If you decide to distribute profits, you pay 15% corporate tax, and the shareholder pays 5% dividend tax.
Nothing happens until you extract the money.
This structure gives founders and business owners full control over when and how they are taxed. You can keep reinvesting, scaling, and growing without the immediate burden of corporate tax. Tech companies, crypto projects, consulting firms, and startups love this approach because it frees up capital.
If you plan to build rather than extract, Georgia’s model gives you oxygen.
Small Business Tax Can Be as Low as 1%
Freelancers, creators, developers, marketers, designers, and consultants are surprised to discover that Georgia offers a simplified small business framework where qualified individual entrepreneurs pay only 1% tax on turnover.
This is not a loophole, but it is a structured, legal regime designed to support small businesses.It applies to many types of service income, especially remote and international work.
To qualify, you must:
Register as an individual entrepreneur
Stay within the annual turnover limit
Operate in an eligible business activity
Keep basic monthly reporting
For many remote workers, the math is simple. Earning money from foreign clients. Paying 1 percent. Filing in minutes.
This is one of the reasons digital nomads, freelancers, and remote employees consider Georgia one of the most attractive low-tax destinations in Europe and Asia.
Not Every Business Need to Pay VAT
VAT in most countries is complicated. Almost every business needs to register. Almost every invoice includes VAT. And almost every freelancer or company spends time dealing with VAT declarations, deductions, and audits.
Georgia works differently. Many businesses never pay VAT at all, because their services are not considered VAT-able under Georgian law.
The rule is simple: If your service is delivered outside Georgia, VAT does not apply.
So if you work with foreign clients, send invoices abroad, or deliver work electronically from Georgia to another country, you often avoid:
VAT registration
charging VAT
filing VAT returns
tracking VAT invoices
dealing with VAT compliance
This is exactly why IT outsourcing firms, designers, consultants, and international service providers love operating from Georgia. The tax system is designed so export-based services avoid VAT entirely.
When VAT Applies in Georgia
VAT is charged at 18 percent, but only in situations where your activity meets specific criteria. It applies when you:
sell goods or services inside Georgia,
import goods, or
exceed the VAT registration threshold.
If your revenue comes from Georgian customers, you fall into the VAT system. But if your clients are abroad, and your work is delivered abroad, VAT usually does not apply.
VAT-Registered Businesses That Can Avoid Charging VAT (with the Right to Deduct)
Even if a business chooses to register for VAT, some activities allow them to avoid charging VAT and still claim back VAT on their expenses. These are considered “VAT-exempt with the right of deduction.”
A few common examples include:
Export and re-export of goods
Services delivered to diplomats and their families
Services provided under international agreements that exempt them from VAT
Tourist packages sold to foreign tourists
Delivery of books
Specific products supplied by pharmaceutical companies
These categories can reclaim VAT paid on purchases while remaining exempt from charging VAT on sales.
VAT-Exempt Activities With No Right to Deduct
Some businesses do not have to charge VAT, but they also cannot reclaim VAT paid on their expenses. These sectors include:
medical services
education delivered by accredited institutions
loan and interest operations
standard banking services
sale of land without buildings
certain financial operations
These categories avoid collecting VAT but cannot deduct VAT spent on business purchases.If needed, these businesses can still choose to register for VAT voluntarily.
When Your Service Is Not VAT-Able at All
A service is only VAT-able in Georgia if the place of delivery is Georgia.If the place of delivery is abroad, the service is not subject to VAT, even if the person performing the service lives in Georgia.
This means:
Consulting delivered abroad
Design work for foreign clients
Software developed for EU or US customers
Online marketing delivered to non-Georgian partners
Any service performed electronically and consumed outside Georgia
None of these require VAT. This exemption covers a huge portion of Georgia’s freelancer, IT, Web3, outsourcing, and remote-first economy.
Tech Companies Can Qualify for Special Tax Regimes
Georgia offers several formal tax statuses designed specifically for IT, software, digital services, and tech-enabled companies. These statuses are written into the tax code and provide fixed, predictable tax reductions. The numbers are what make them so attractive.
Virtual Zone Status (VZ)
This is for companies that export software or IT services.When approved, the company receives:
0% corporate tax on income from exported IT services
0% VAT on export services
5% dividend tax when distributing profit
In practice, a Virtual Zone company selling software abroad can operate with an effective tax rate close to 5 percent total, depending on how often dividends are paid.
You qualify if:
Your primary business activity is software development or export-based IT services
Your revenue comes from clients outside Georgia
You apply through the Ministry of Finance and receive a formal certificate
Approval usually takes 10–15 business days.
International Company Status
Int Company Status applies to companies operating in:
IT services
BPO
Financial services
Certain global tech and digital industries
If approved, the tax reductions are substantial:
Corporate profit tax drops from 15% to 5%
Personal income tax on salaries drops from 20% to 5%
Dividend tax drops from 5% to 0%
Import taxes may be reduced
To qualify, a company must:
Engage in approved activities under the official ICS list
Have real operations or staff in Georgia
Apply to and be approved by the Ministry of Finance
International Company Status is often used by companies hiring global teams through employer of record Georgia, tech outsourcing firms, fintech operators, and development groups. It can reduce long-term operational costs dramatically. Many firms lower their total tax burden by 60–80 percent under this regime.
Free Industrial Zone (FIZ)
FIZ status is more specific and applies to companies operating physically inside a designated Free Industrial Zone, such as in:
Kutaisi
Poti
Tbilisi (smaller zones)
Inside a FIZ, the tax benefits include:
0% corporate tax
0% VAT
0% import tax
0% property tax
0% dividend tax
This regime is powerful, but limited to companies that:
Physically operate from inside the zone
Export their products or services
Do not generate income from the Georgian domestic market
FIZ is mostly used for manufacturing, logistics, and export-oriented tech hardware companies. It is less common for software firms.
Why These Regimes Matter
Most countries offer “innovation incentives,” but Georgia offers statutory tax reductions, meaning the rates are written directly into law. Companies know exactly what they will pay:
Standard Georgian LLC → 15% corporate tax
Virtual Zone → 0% on IT export income
ICS → 5% corporate, 5% payroll, 0% dividend
FIZ → 0% on almost everything
For tech companies scaling global teams, these numbers can determine where they choose to operate. For founders comparing jurisdictions, Georgia often emerges as one of the most cost-effective and predictable tax locations anywhere in Europe or Asia.
Georgia Has Over 57 Double Taxation Treaties That Protect Your Global Income
One of Georgia’s most underrated tax advantages is its extensive network of Double Taxation Treaties (DTTs).
These treaties prevent individuals and companies from being taxed twice on the same income when earning money across borders. For remote workers, international founders, contractors, and global businesses, this provides long-term certainty and real financial protection.
Georgia currently has 57 active DTTs with countries including:Germany, France, Poland, the UK, China, India, Switzerland, the Netherlands, Qatar, UAE, Turkey, Latvia, Lithuania, Estonia, and many more.
These treaties matter because they determine which country has the right to tax:
salary income
business income
dividends
royalties
interest
capital gains
If your home country has a treaty with Georgia, you avoid paying tax twice — once in Georgia and again in your home jurisdiction.
How DTTs Work in Practice
You live in Georgia and earn salary from abroadA DTT can ensure that salary is taxed only in Georgia at the standard 20 percent rate, instead of being taxed again in your home country.
You distribute dividends from your Georgian LLCIf your country has a DTT with Georgia, you can often avoid additional taxation abroad or apply a reduced rate. Some treaties reduce dividend tax to 0% or 5%, depending on the structure.
You provide services to companies across multiple countriesA DTT clarifies which country can tax your business income. For many service businesses based in Georgia, the tax obligation remains in Georgia, not in the client’s country.
You invest or receive royaltiesTreaties often reduce withholding taxes on royalties, interest, or other passive income. This keeps international revenue streams efficient and predictable.
Why DTTs Are a Strategic Advantage
Countries without treaty networks force people to structure their income carefully or risk double taxation. Georgia removes that concern for the majority of foreign nationals.
For founders running international operations, DTTs make Georgia a globally compatible tax base. Combined with Georgia’s low corporate tax on distributed profits, 1 percent IE regime, and VAT exemptions for export-based services, treaties help ensure that income earned abroad stays efficient and legally protected.
A Note on Tax Residency
Double taxation protection typically applies only when you are a tax resident of Georgia (spending 183+ days per year). Once you gain Georgian tax residency, the relevant treaty determines how your global income is treated and where tax obligations fall.
This clarity is one of the reasons remote professionals from Europe, the Middle East, and Asia choose Georgia as their long-term base.
Georgia Is Modernizing Faster Than People Realize
Many newcomers assume Georgia’s tax benefits are temporary or fragile. In reality, Georgia’s economic policy has been stable for years.
The country positions itself as a business-friendly hub connecting Europe and Asia. Regulations modernize, but the core philosophy stays the same: low barriers, simple rules, easy compliance.
Recent years have brought upgrades to digital portals, more automation in tax reporting, clearer guidelines for individual entrepreneurs, and better integration between tax authorities and major banks. The result is a system where filing taxes feels closer to using an app than dealing with a bureaucracy.
Georgia’s tax system stands out because it blends low rates with smooth processes and predictable rules. You do not have to be a tax expert to navigate it.
Whether you are a freelancer earning abroad, a founder building a team, a digital nomad relocating temporarily, or a tech company looking for a stable base, Georgia offers a tax framework that respects your time, supports your business, and keeps compliance stress to a minimum.
The five advantages above are only a starting point. Once you begin looking at how tax residency works, how foreign-sourced income is treated, how exemptions apply across industries, and how different structures can reduce your tax bill even further, you start to see why so many entrepreneurs relocate their operations here.
If you want to understand the exact opportunities available for your business model or income type, reach out and book a free consultation with Gegidze.
