International Company Status (ICS): 5% Profit Tax, 5% Payroll, and 0% Dividend Tax for Service Firms
- Apr 24
- 12 min read
Table of contents
TL;DR – International Company Status (ICS) in Georgia
Introduction: Why Georgia Is Becoming the Go-To Destination for IT and Maritime Firms
Who Can Apply for International Company Status?
ICS vs Other Business Structures in Georgia
How to Apply for International Company Status in Georgia
What About VAT? Understanding ICS VAT Implications
Revocation of ICS Status: What You Need to Know
How Gegidze Can Help You Apply for ICS
The Smart Choice for IT and Maritime Firms
Frequently asked questions (FAQs)
TL;DR – International Company Status (ICS) in Georgia
Georgia’s International Company Status (ICS) offers IT and Maritime companies incredible tax benefits: 5% corporate income tax, 5% payroll tax, and 0% dividend tax.
To qualify, companies must derive at least 98% of their revenue from the IT or Maritime sectors and have physical presence in Georgia.
The process involves registering a company in Georgia, submitting an application with required documents, and waiting for approval.
Once granted, ICS status allows for a highly tax-efficient setup, making Georgia an attractive destination for international service firms.
Introduction: Why Georgia Is Becoming the Go-To Destination for IT and Maritime Firms
When you’re running a business, tax efficiency isn’t just an advantage, it’s often the key to scaling quickly without burning through profits. For service firms in the IT and Maritime sectors, Georgia offers one of the most attractive tax regimes available today, with the International Company Status (ICS) providing unparalleled benefits for qualifying companies.
On October 8th, 2020, the International Company Status was introduced in Georgia, giving companies in the IT and Maritime industries an incredible opportunity to operate in a low-tax environment while benefiting from:
5% corporate income tax (instead of the standard 15% Georgia tax rate)
5% payroll tax on employee salaries (down from 20%)
0% dividend tax, allowing you to pay dividends without additional tax burdens
For companies offering services globally, whether you’re building SaaS products, running an IT consultancy, or operating a maritime-related business, Georgia’s ICS is an incredibly compelling option for international expansion.
This article will guide you through the essential aspects of the International Company Status in Georgia, including the benefits, eligibility requirements, the application process, and the practical steps you need to take to benefit from this tax-efficient system.
What Is International Company Status (ICS)?
Overview of ICS
The International Company Status (ICS) is a special tax regime introduced by Georgia to attract international IT and Maritime companies. Once granted, ICS status offers substantial tax reductions, including:
5% profit tax: This is applied only to distributed profits. Reinvested profits are exempt from taxation, offering significant savings for growing companies.
5% tax on employee salaries: This is a dramatic reduction from the standard 20% payroll tax rate that applies to regular Georgian companies.
0% dividend tax: This benefit allows businesses to distribute profits to shareholders without additional tax, unlike many other jurisdictions that impose dividend taxes on outgoing payments.
In essence, ICS is designed to encourage foreign businesses to establish a presence in Georgia by offering them significant tax incentives. However, there are specific conditions that businesses must meet to qualify for ICS.
Key Tax Benefits of ICS
The core reason why businesses seek out ICS status is the favorable tax environment. Here's a closer look at each of the major benefits:
5% Corporate Income Tax
Under the ICS regime, companies are taxed at 5% on distributed profits. This is a stark contrast to the usual 15% corporate tax in Georgia. For businesses that reinvest profits, this means that they can grow their operations without triggering tax on earnings that are kept within the business.
This 5% corporate tax applies only when profits are distributed. If the profits are retained for reinvestment into the company, no tax is levied, which is a powerful advantage for companies looking to expand and develop.
5% Payroll Tax
For companies with employees in Georgia, ICS status reduces payroll tax from 20% to just 5%. This reduction makes Georgia an attractive location for businesses seeking to hire talented professionals in the IT and Maritime sectors.
However, it’s important to note that the 2% pension contribution is still applicable, which is a standard requirement for employees who are citizens or permanent residents of Georgia.
0% Dividend Tax
Unlike most countries, Georgia does not charge a dividends tax for ICS-qualified companies. This means that you can distribute profits to shareholders without incurring an additional tax liability on the payouts. This tax break allows investors and business owners to take advantage of tax-free dividends, making Georgia one of the most investor-friendly environments in the region.
Who Can Apply for International Company Status?
Eligibility Criteria for ICS
To qualify for ICS, companies must meet a set of specific requirements. These criteria ensure that only businesses engaged in qualifying activities can benefit from the low tax rates. Let’s break down the requirements:
1. IT or Maritime Sector Focus
Your company must derive at least 98% of its annual revenue from activities in the IT or Maritime sectors. This means that businesses in industries like software development, SaaS, web development, IT consulting, and maritime logistics are eligible to apply for ICS.
The Georgia government has outlined which activities fall under these sectors, and it is crucial that companies apply under the correct sector classification. Non-IT and non-maritime activities will disqualify the business from ICS benefits.
2. Georgia-Based Enterprise
To be eligible for ICS, the company must be a Georgian enterprise, meaning that it must be legally registered in Georgia. However, even foreign companies can qualify for ICS if they establish a Georgian subsidiary that meets the criteria outlined by the legislation.
For example, a non-resident company that has been operating in the IT sector for more than two years can open a subsidiary in Georgia that qualifies for ICS status as long as the subsidiary derives the majority of its revenue from eligible activities.
3. Physical Substance in Georgia
Your business must have a physical presence in Georgia. This means that your company must have employees, offices, or facilities in the country. The Georgian authorities are very clear that businesses seeking ICS status must demonstrate physical substance to prove that the business is genuinely operating in Georgia.
This is one of the key differences between ICS and other tax regimes like the Virtual Zone. In the Virtual Zone, businesses don’t need to show physical substance, but for ICS, having an active operation within Georgia is a requirement.
4. Company Structure and Ownership
The company applying for ICS must be either:
A Georgian enterprise with at least two years of operation in the eligible sectors (IT or Maritime),
A foreign (non-resident) enterprise with two years of operation in these sectors, establishing a subsidiary in Georgia,
A Georgian enterprise that is owned by a parent company (either Georgian or non-Georgian) with 50% or more ownership, and the parent company must have at least two years of experience in the relevant sector.
Non-Resident Companies: How to Qualify
For non-resident companies that want to apply for ICS, the process is simple but specific:
The foreign enterprise must operate in the qualifying sector for at least two years.
The foreign company can then set up a Georgian subsidiary that generates 98% of its revenue from eligible IT or Maritime services.
This allows foreign companies to set up a local presence in Georgia, qualifying for ICS benefits while keeping their global operations in sync with the tax-efficient structure in Georgia.
ICS vs Other Business Structures in Georgia
Georgia 1% Tax vs ICS
Many business owners may wonder whether to opt for the Georgia 1% tax structure (available to individual entrepreneurs in Georgia) or to go for ICS.
The Georgia 1% tax is ideal for freelancers, small business owners, or solo entrepreneurs who have a turnover under 500,000 GEL. The ICS, however, is designed for more substantial IT and Maritime operations and offers a broader set of benefits.
For growing companies, ICS is generally the better choice due to the tax advantages on profit distribution, dividends, and payroll.
ICS vs Virtual Zone Status
Both Virtual Zone and ICS are attractive options for IT companies, but there are differences. ICS is more comprehensive, applying not just to IT companies but also to the Maritime sector, while Virtual Zone is specifically designed for businesses focused on foreign income.
While Virtual Zone offers 0% tax on foreign income, ICS applies a 5% profit tax, 5% payroll tax, and 0% dividend tax, which may be more beneficial for larger companies looking to scale.
How to Apply for International Company Status in Georgia
Step 1: Register Your Company in Georgia
Before applying for International Company Status (ICS), the first essential step is to ensure your company is properly registered in Georgia. This means establishing a Georgian LLC (limited liability company) and complying with the local business setup process. Fortunately, this process is relatively straightforward in Georgia compared to other jurisdictions.
To start:
Choose a company name and ensure it complies with Georgian naming regulations.
Register your company with the Georgian Revenue Service. You will need to provide:
A legal address for your business.
Basic information about your business activities.
A designated director for the company.
Obtain a tax identification number (TIN) for your company, which is necessary for tax reporting purposes.
Appoint shareholders and directors in line with Georgian corporate laws.
This registration process can typically be completed within a few business days, making Georgia an attractive destination for entrepreneurs who want to quickly set up a business.
Once your company is registered, you can move on to applying for ICS.
Step 2: Gather the Required Documentation
To apply for ICS, you will need to gather several key documents. This documentation will help confirm that your company meets all the necessary eligibility requirements for ICS status.
The core documents required include:
Company Registration Documents:
Your company's identification number, official name, and legal form.
Your company’s articles of incorporation (charter), which outline the company’s structure and objectives.
Proof of your company’s registration in Georgia.
Revenue Proof:
You will need to demonstrate that at least 98% of your company’s annual revenue comes from activities within the IT or Maritime sectors. This is a critical requirement and must be clearly documented.
Business Activity Description:
A detailed description of the services your company provides, especially highlighting how they fall under the IT or Maritime sectors.
For example, if your company offers IT services, this could include software development, SaaS platforms, or cloud computing services.
Place of Business:
You must provide information about the physical location of your business in Georgia, including the office or workspaces you use. This proves that your company has a tangible presence in Georgia, which is necessary to qualify for ICS.
Application Form:
You must complete the official ICS application form, which is submitted to the Revenue Service via Georgia’s online portal. This form requires basic information about your company and your eligibility.
Ensure all these documents are clear, accurate, and up to date. Any inconsistencies or missing information could delay your application and potentially lead to rejection.
Step 3: Submit the Application
Once your company is registered and you have all the necessary documents, you can submit your ICS application.
The submission is done through the Revenue Service of Georgia’s online portal. The portal is user-friendly, and the application form is straightforward. During submission, ensure that:
All supporting documents (including company registration and revenue proof) are attached.
The business activities clearly align with IT or Maritime sectors as per Georgian regulations.
The application form is filled out completely and accurately.
After submission, the Revenue Service will review your application. This step typically takes 5–10 business days, and if everything is in order, your application will be forwarded to the Ministry of Finance for final approval.
If there is any missing or unclear information, you will be notified and given 10 business days to provide additional documentation. This is an important step to avoid unnecessary delays.
Step 4: Wait for Approval
The approval process for ICS status typically takes about 10 business days. During this period, the Georgian authorities will carefully review your application and ensure your company meets the eligibility requirements for ICS.
Once your application is reviewed, the Ministry of Finance will make the final decision. If everything is in order and your company meets all the necessary criteria, you will be granted ICS status.
After receiving approval, your ICS status will be officially granted from the first day of the month in which the status was granted. From that moment forward, your business will enjoy the tax benefits outlined under ICS.
Step 5: Comply with Ongoing ICS Requirements
Once your company has been awarded ICS status, you must ensure ongoing compliance with the program’s requirements. Failure to meet the necessary criteria could result in your ICS status being revoked.
5.1 Maintain Eligibility
To keep your ICS benefits, your company must:
Continue to derive at least 98% of its revenue from eligible IT or Maritime activities. If you stray from this sector, your ICS status could be revoked.
Keep detailed records of your business activities, including client contracts, invoices, and proof of revenue from foreign markets.
5.2 File Regular Tax Returns
Even though ICS offers 5% profit tax and 0% dividend tax, you will still need to submit regular tax returns and pay any applicable taxes on the distributed profits. Additionally, you will be responsible for paying the 5% payroll tax for your employees.
5.3 Property Tax Exemption
For ICS companies, property tax exemption applies to properties used directly for the company’s operations. This exemption does not cover land, but it can be a significant benefit for companies that use office space, facilities, or machinery to carry out their business.
What About VAT? Understanding ICS VAT Implications
Unlike some other tax programs, ICS does not offer broad VAT exemptions. However, if your clients are located outside of Georgia, your company may be eligible for VAT exemptions on certain services.
Key Points on VAT for ICS Companies
B2B Transactions: If your business serves other businesses (B2B) internationally, you are likely exempt from charging VAT on services. This helps avoid the complexity of reverse VAT or VAT registration.
VAT-Registered Companies: If your company is VAT registered in Georgia, you can reclaim VAT on business-related purchases and avoid reverse VAT charges.
B2C Transactions: If your company provides services directly to consumers (B2C), you may be required to charge VAT in some cases. However, this depends on the nature of your services and client location.
Given the complexity of VAT rules, it is recommended that ICS companies consult with a Georgian tax advisor to ensure full compliance and maximize tax efficiency.
Revocation of ICS Status: What You Need to Know
It is crucial to understand that ICS status can be revoked under certain circumstances. If your company:
Generates more than 2% of its revenue from non-eligible activities
Fails to meet the IT or Maritime sector requirements
Stops meeting the physical substance requirements in Georgia
Then your ICS status could be revoked. The Georgian Ministry of Finance can initiate a review, and if the company is found to be non-compliant, the ICS status will be revoked within 10 business days.
In such cases, your company may lose its tax benefits, and you will need to follow the regular tax rates applicable in Georgia.
How Gegidze Can Help You Apply for ICS
Gegidze is here to guide you through every step of the International Company Status process. Whether you are new to Georgia or expanding your existing business, we provide:
Company registration assistance in Georgia
ICS application support
Ongoing tax and compliance services
Banking setup and payroll management for ICS companies
Consultation on VAT and other taxation issues
Our team of experts will ensure that your business is set up in full compliance with Georgian regulations, allowing you to focus on growing your operations while enjoying the tax advantages that ICS offers.
The Smart Choice for IT and Maritime Firms
The International Company Status (ICS) in Georgia offers significant tax benefits that can help service firms in the ITand Maritime sectors scale their operations efficiently. With 5% profit tax, 0% dividend tax, and 5% payroll tax, Georgia presents a highly attractive destination for businesses looking to optimize their tax burden.
By meeting the eligibility criteria and following the straightforward application process, your company can access these benefits and grow in a tax-efficient environment. If you’re interested in learning more about how to move to Georgiaand apply for ICS, Gegidze is here to guide you through the entire process.
Contact us today to start your application for ICS and take advantage of Georgia's tax-friendly landscape for IT and Maritime businesses.
Frequently asked questions (FAQs)
What is International Company Status (ICS) in Georgia?
ICS is a special tax status granted to companies in the IT and Maritime sectors, offering benefits such as 5% corporate income tax, 5% payroll tax, and 0% dividend tax. To qualify, businesses must be registered in Georgia and have at least 98% of their revenue from eligible sectors.
How can I apply for ICS in Georgia?
To apply for ICS, you need to:
Register your company in Georgia as an LLC.
Ensure that at least 98% of your revenue comes from IT or Maritime activities.
Submit an application with the required documents through the Georgian Revenue Service online portal.
Wait for approval, which typically takes 10 business days.
What are the tax benefits of ICS?
ICS offers several tax benefits:
5% corporate income tax on distributed profits (reinvested profits are not taxed).
5% payroll tax on employee salaries (reduced from 20%).
0% dividend tax, allowing tax-free distribution of profits to shareholders.
These benefits make ICS highly advantageous for companies in the IT and Maritime sectors.
What are the eligibility requirements for ICS?
To qualify for ICS, your company must:
Be a Georgian enterprise (either a local entity or a foreign enterprise with a Georgian subsidiary).
Derive at least 98% of revenue from IT or Maritime activities.
Maintain a physical presence in Georgia with adequate resources to carry out business activities.
Can foreign companies apply for ICS?
Yes. A foreign enterprise can qualify for ICS by setting up a Georgian subsidiary. The parent company must have been operating in the IT or Maritime sectors for at least two years, and the Georgian subsidiary must derive at least 98% of its revenue from these sectors.
