Registering a Company in Georgia: Fast and Flexible

Georgia as a Tax Jurisdiction

Georgia has gradually established itself as a jurisdiction combining relatively moderate taxation with a commercially liberal regulatory environment. Foreign investors, technology companies, exporters, and internationally oriented corporate groups often consider the country due to its simplified administration model, absence of strict currency controls, and availability of multiple preferential tax frameworks.

The Georgian taxation system is administered through both national and municipal mechanisms. Depending on the nature of the activity involved, obligations may arise at either level.

Individual Taxation and Entrepreneurial Regimes

Georgia applies a flat-rate approach to personal taxation. Income earned by individuals is generally taxed at 20%, without progressive escalation linked to income brackets.

Alongside the ordinary system, Georgian legislation contains simplified structures designed for entrepreneurs operating on a small scale.

The legal framework also distinguishes microbusiness activity. Persons generating annual revenue below GEL 30,000 and operating without employees may qualify for exemption from taxation on entrepreneurial income after completing the required registration procedure.

Corporate Taxation Principles

Companies recognized as Georgian tax residents are generally taxed on worldwide income. The standard profit tax rate applicable to ordinary businesses is 15%.

Higher taxation applies within the financial sector. Commercial banks, credit organizations, microfinance entities, and certain lending service providers are subject to a 20% corporate rate.

Georgia introduced an Estonian-style profit taxation mechanism in 2017. Under this approach, retained earnings are not ordinarily taxed until profits are distributed or until transactions occur that are treated as economically equivalent to distributions.

Consequently, taxation is generally triggered by specific transactions rather than by accounting profit itself. Taxable events may include:

• dividend allocations;

• non-commercial expenditures;

• uncompensated transfers of assets;

• representation expenses exceeding permitted thresholds.

The concept of distributed profit is interpreted broadly under Georgian rules and may encompass virtually any transfer of economic benefit to shareholders or company participants, whether in cash or through non-cash mechanisms.

At the same time, dividend flows between Georgian resident legal entities are generally protected from repeated taxation. Certain foreign-source receipts may likewise avoid secondary taxation unless connected with jurisdictions benefiting from preferential offshore treatment.

Indirect Taxation and VAT Administration

Georgia imposes Value Added Tax at the standard rate of 18% on taxable supplies of goods and services carried out within the country.

Mandatory VAT registration normally arises once taxable turnover exceeds GEL 100,000 during any rolling twelve-month period.

Digital Services Supplied from Abroad

Foreign providers of digital or electronically supplied services may become liable for Georgian VAT even without maintaining local residency status or a permanent establishment.

Where services are supplied to private individuals located in Georgia, the foreign supplier assumes responsibility for VAT calculation, filing obligations, and payment of tax liabilities under domestic rules.

Georgian legislation permits settlement of tax liabilities in GEL as well as in certain freely convertible foreign currencies, including USD and EUR.

Withholding Tax Rules

Non-residents deriving Georgian-source income without establishing a permanent establishment are commonly taxed through withholding mechanisms.

Under the standard framework:

• dividends are taxed at 5%;

• interest payments are taxed at 5%;

• royalties are taxed at 5%;

• compensation for services rendered within Georgia generally attracts 10%;

• other Georgian-source payments may also fall under the 10% rate.

Enhanced withholding rules apply where the recipient is registered in a jurisdiction classified by Georgia as non-cooperative or low-tax. In such cases, the rate increases to 15% regardless of the legal character of the payment.

International Tax Treaty Network

Georgia maintains an extensive network of bilateral tax treaties intended to reduce double taxation risks arising in cross-border operations. The country has concluded dozens of Double Tax Conventions, improving its attractiveness for international structuring and foreign investment projects.

Currency Regulation and Cross-Border Payments

The country operates under a highly liberalized foreign exchange environment. Traditional currency control mechanisms are largely absent, and cross-border transfers involving capital movement, foreign currency operations, and settlements with non-residents may generally be carried out without substantial restrictions.

This regulatory flexibility remains one of the principal reasons internationally mobile businesses consider Georgia for operational or holding structures.

Recognition of Foreign Taxes

Taxes paid abroad may generally be credited against Georgian profit tax liabilities provided statutory requirements are satisfied. The available credit is limited to the amount of Georgian tax attributable to the corresponding foreign-source income.

Comparable principles may also extend to dividend flows and transactions connected with distributed profit taxation mechanisms.

Free Industrial Zone Regime

Georgia has established Free Industrial Zones operating under separate preferential taxation frameworks. Companies holding the relevant authorization and conducting qualifying activity within the designated territory may access multiple fiscal incentives.

Potential benefits may include:

• exemption from corporate taxation on qualifying activities;

• relief from VAT and customs duties on imports into the zone;

• non-application of VAT to internal zone transactions;

• exemption from property taxation for qualifying assets located inside the territory;

• simplified taxation procedures for movement of goods into the broader Georgian market.

Transactions performed with Georgian residents outside the zone may additionally fall within a separate 4% turnover taxation mechanism.

Tax Incentives for Technology Businesses

Georgia also offers targeted tax advantages for qualifying IT businesses.

Companies engaged in software development and digital activities may apply for Virtual Zone Person status. Income generated from exported IT products and technology services supplied outside Georgia may qualify for exemption from corporate profit taxation under this framework.

Special Trading Company Regime

The Georgian legal framework separately recognizes Special Trading Companies involved in import operations, international trade, and re-export of foreign-origin goods.

Under the preferential rules applicable to this category, profits generated from qualifying operations may avoid taxation upon distribution.

International Company Framework

Georgia additionally maintains a special regime for companies satisfying the statutory criteria for International Company status. The framework is primarily intended for businesses supplying services to foreign markets and deriving the majority of revenue from outside Georgia.

Available incentives may include:

• reduced 5% taxation on distributed profits and certain categories of expenses;

• exemption from dividend taxation;

• preferential salary withholding mechanisms;

• exemption from property tax for qualifying operational assets other than land.

The legislation prohibits simultaneous use of International Company and Virtual Zone Person regimes. Acquisition of one status automatically results in cancellation of the other.

Activities commonly associated with eligibility include software engineering, IT outsourcing, hosting infrastructure, digital content processing, and certain technical or commercial maritime-support services.