What is Innovation Status in Georgia and How to Get It (Before Everyone Else)
- Tinatin Tolordava
- Apr 4
- 7 min read
Table of contents
Zero Income Tax for Startups? Georgia Just Raised the Stakes.
On March 31, 2025, the Georgian government confirmed what many in the tech and business community have been waiting for: innovative startups in Georgia will be eligible for up to 10 years of tax breaks, including 0% corporate income tax for the first 3 years.
Georgia is moving aggressively to position itself as a magnet for innovation, and the government is betting big on its startup sector. But here’s the catch: only the right companies will qualify, and most aren’t ready yet.
So, what does this mean if you’re running or planning to launch a startup in Georgia?
Let’s start with the core offer:
0% corporate tax in Georgia for 3 years
Extended tax incentives for 10 years in total
Additional support for small and mid-sized companies working on tech-driven products
This policy could reshape the Georgia corporate tax landscape. It would give local founders a powerful reason to stay and build, foreign entrepreneurs a reason to relocate, and investors more confidence in Georgia’s startup environment.
But only if businesses move early.
This new incentive package might become the most important tax reform for startup Georgia has ever seen. But it won’t help unless you’re positioned to exploit it. So if you plan to incorporate, scale, or attract investment this year, the clock just started ticking.
Let’s discuss what you should be doing before the law takes effect and the competition begins.
What’s Actually Changing
At the heart of this announcement are amendments to two prominent legal frameworks in Georgia:
The Law “On Innovations”
The Tax Code of Georgia
These updates are designed to do one thing: reward innovation with meaningful tax relief. And not just a symbolic gesture, a real, quantifiable financial benefit that can affect how startups scale, hire, and attract capital.
The Law “On Innovations” - Defining What Counts
Until now, “innovation” hasn’t been clearly defined in Georgian legislation. The new amendments aim to change that. Soon, a legal definition will outline precisely what qualifies a company as an “innovative startup.” This is critical because without formal status, no tax incentives will apply.
This also opens the door for SMEs (not just Silicon Valley-style startups) working on industry-specific innovations. So if you’re a Georgian company building niche tech or reinventing old systems, there’s a real chance you’ll qualify.
Georgia’s GII ranking has been improving from 2020 to 2024, representing:
Progress in startup infrastructure
Better support for research and development (R&D)
More IP protection laws (like the Georgia Uniform Trade Secrets Act)
A shift toward attracting foreign investment and tech talent
Stronger alignment with global innovation policy standards
The Tax Code of Georgia: Where the Money Comes In
The most significant incentive is clear: 0% corporate income tax for the first three years.
This is not a “reduced” or “delayed” tax but a zero tax. That could be the difference between survival and scaling for startups, especially those operating on tight cash flow.
Here’s how it plays out:
If you qualify, your company pays 0% corporate tax in Georgia for the first three years
After that, depending on your activities and continued compliance, you may continue to receive reduced tax rates or exemptions for up to a decade.
It’s also likely that other benefits will be layered in, including:
VAT exemptions on R&D services
Reduced tax on dividend distributions
Simplified reporting for qualified startups
Historically, Georgia has had a competitive corporate tax rate of 15%, which has attracted foreign entrepreneurs. But this takes it further, essentially rewarding companies that take risks and build something new.
Why It Matters Now
Georgia’s economy is still recovering from regional instability and the impact of the pandemic. However, the government sees tech and entrepreneurship as long-term stabilizers and potentially growth engines.
If these changes are implemented as planned, Georgia will once again be one of the most tax-friendly European countries for startups. It’s already recognized for its ease of doing business, and now it wants to add tax efficiency to that reputation.
Whether you're building locally or considering moving operations, this is a rare opportunity to invest in Georgia at the right time, when the infrastructure is catching up with the ambition.
What It Means for Your Business
Who’s Actually Eligible?
Right now, the government hasn’t released the complete checklist. However, expect strict criteria based on the draft law and past announcements. To be recognized as an “innovative startup,” your business will likely need to:
Be registered and operating in Georgia
Develop proprietary technology or software.
Conduct R&D locally
Demonstrate potential for market growth or exports.
Maintain transparent accounting and legal records.
So, even if you’re doing innovative work, you won’t qualify unless you officially register your business in Georgia, comply with tax laws, and hold the proper legal status. It’s not just about what your startup does. It’s about how you’re structured.
Tax Residency: The Silent Gatekeeper
Many founders underestimate the importance of Georgia tax residency until it’s too late. If your company isn’t recognized as a Georgian tax resident, you won’t be eligible for local benefits, including the upcoming zero-tax regime.
What does tax residency mean in practical terms?
Your company must be incorporated in Georgia.
Your management and decision-making must be based in Georgia.
You’ll need a Georgian bank account, a tax ID, and local filings.
You could lose your chance at 0% Georgia corporate income tax if your legal seat is elsewhere, even from Tbilisi. And having a Georgian domain or office lease isn’t enough.
Building Strategically
Think of it this way: this isn’t a grant. It’s a reward system. The Georgian government says that if you build something real here, they will support you with real money, not take it away from you in taxes.
But only if you play by their rules.
So, whether you’re a local founder going legit or a foreign startup looking for a regional base, here’s the bottom line:
You’ll need clear incorporation documents
You’ll need to prove tax residency in Georgia
You must align your entity type with Georgia corporate income tax eligibility
You’ll need to start now, not after the law is finalized
How to Prepare Now: 5-Step Startup Checklist
Each step builds the legal and financial foundation you’ll need to be taken seriously when the government starts reviewing applicants.
1. Choose the Right Business Structure
Your company’s legal form matters more than you think. The legal structure you pick affects:
Your eligibility for tax incentives
Your ability to receive investment
How intellectual property is assigned
Your tax residency and compliance obligations
2. Define and Document Your Innovation
You’ll need to prove that your business is truly innovative.
That means documenting:
What you’re building
How it is different
Why it qualifies as a tech or innovation product
Any research, testing, or development you’ve done
Prepare a written overview of your innovation, supported by:
Product development timelines
Technical architecture or prototypes
Evidence of R&D (even internal reports count)
Customer use cases or testing feedback
3. Secure IP and Apply Legal Protection
Ownership of innovation must be crystal clear. Start by ensuring all IP (code, content, designs, patents) is transferred to the business entity. Then, consider protections under the Georgia Uniform Trade Secrets Act if your product or algorithm relies on proprietary methods.
Common tools to use here:
Employment or contractor agreements with IP clauses
NDAs with collaborators or vendors
Trademark and patent filings if applicable
Internal IP assignment documentation
This is often overlooked. Many startups operate for months or years without realizing their core assets legally belong to someone else.
4. Align Tax Filings and Get Your Georgia Tax ID Number
Without a Georgia tax ID number, your business doesn’t exist. This allows you to begin submitting your Georgia tax return, even if your income is low or zero in the early stages. Don’t skip this. You’ll likely need proof of tax filings when applying for certification, and missing years can raise red flags.
If you're unsure how to navigate the system, work with a tax advisor or local service provider. A mistake here could delay or derail your eligibility entirely.
5. Ensure Proper Accounting and Tax Return Procedures
You can’t claim tax exemptions if you can’t prove you were paying taxes. This means setting up:
Accurate and GAAP-aligned bookkeeping
Regular Georgia tax return submissions (especially Form 500)
Clear financial reporting linked to your Georgian business entity
Proper categorization of R&D expenses, salaries, and investments
Why does this matter? The Georgia tax return form 500 is the official document that shows your company’s profit or loss and your tax liability. If you’re applying for 0% corporate income tax, your Form 500s will be used to verify that benefit.
Consistent, compliant filing protects you from audit risks and builds a strong paper trail for future grants, partnerships, or funding rounds.
How Gegidze Can Help
If everything so far feels like a lot, it is. Structuring a business to qualify for tax exemptions legally, navigating the bureaucracy, and proving your innovation status isn’t something most founders or early-stage teams can handle alone.
At Gegidze, we work with startups, growth-stage companies, and foreign investors who want to establish a real, compliant presence in Georgia and benefit from the country’s evolving business-friendly tax regime.
From company formation in Georgia to ongoing tax filings and certification readiness, we handle the legal, financial, and regulatory work so you can focus on growth. If you’re applying for 0% Georgia corporate income tax, timing and structure are everything. Whether launching locally or expanding into the region, we ensure you’re ready and ahead of the curve.
Let’s ensure you’re ready to benefit from Georgia’s boldest tax policy yet.
Ready to get started? Book your free consultation.
Frequently asked questions (FAQ)
What types of businesses qualify for Innovation Status in Georgia?
To qualify, your company must be legally registered in Georgia, focused on developing proprietary technology or software, and actively conducting R&D. You’ll also need transparent accounting and a structure that supports tax residency in Georgia.
