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IT Zone (Virtual Zone) Georgia


Who can apply for the IT Zone (Virtual Zone) status?
 
IT Zone Company is an opportunity for IT-related businesses and freelancers to use the tax advantage given by the Georgian government.

Granted the IT Zone status a company takes advantage of 0% corporate income tax. The VAT rate is also only 0% and 5% withholding tax on dividends (when dividends are distributed to the shareholders). No annual license fees

To get a status of IT Zone (Virtual Zone) company the main activity of a business should be related to IT, Software and Internet
      

IT Zone (Virtual Zone) in Georgia advantages:

 

✅ Company set up or purchase within 1 business day.

✅ No annual license fee for the Virtual Zone status payable.

✅ 0% tax on company profit. 0% VAT
Important: The Virtual Zone company is not eligible to do business within Georgia (no local customers).

✅ High skilled IT staff for reasonable wages.

✅ Virtual Zone license will be obtained within 10 working days only.


✅ Shelf companies available which already have obtained the Virtual Zone status.

✅ No requirements to appoint a local director.

✅ The company can be fully managed remotely.

✅ 100% foreign ownership possible, no restrictions.

✅ Direct flight connections from the main European and Middle Eastern airports to Kutaisi and Tbilisi.

✅ No legal requirements to employ staff in Georgia.

✅ Only 5% of withholding tax on dividend payments (with exemptions depending on the Double Tax Treaty).

Free Industrial Zone Company 


The most important advantage of operating a business in a Georgian FIZ (Free Industrial Zone) are plenty of tax incentives:
 
✅  FIZ incorporated entities are exempt from Corporate Income Tax on certain conditions envisaged by the Tax Code of Georgia

✅  Goods imported into FIZ are not subject to VAT and import tax;

✅  Transactions among FIZ incorporated companies are not subject to VAT;

✅  The FIZ company is exempted from property tax; and

✅  There are no restrictions on capital repatriation.

For the majority of other issues, FIZ companies are subject to the standard Georgian legislation, including the double tax treaties entered into by Georgia with other countries. Accordingly, relevant withholding taxes on dividends, interests and other payments made abroad to a foreign shareholder, apply to such FIZ companies as well.

Georgia has industrial zones in several places, including:
  • The capital of Georgia, Tbilisi;
  • Kutaisi, which is an important connecting hub between Tbilisi and Black Sea Ports; and
  • Poti – the first free industrial zone in the Caucasus region.

Domestic Company

 
A domestic company is obliged to 15% corporate tax on profits and 5% withholding tax (when dividends are pdistributed to the shareholders). There are low running costs. Also, profit can be “parked” in the company tax-free. This is perfect for local businesses in Georgia.

 
Limited Liability Company (LLC) is the most common entrepreneurial form in Georgia. According to the Law “On Entrepreneurs”, the liability of an LLC before its creditors is limited to company assets, and partners are not personally responsible for the company’s liabilities. Capital of an LLC is divided into shares. There is no legal requirement for a minimum or maximum amount of capital. Rights and obligations of partners and terms and conditions for share transfers are stipulated by the company charter. A Limited Liability Company is founded by joining the partners’ capital. The company’s existence does not depend on its members; therefore, the exit of a partner will not result in automatic liquidation. An LLC may be established by one or more individuals, legal entities or any combinations thereof. 
 
Company partners exercise their management authority at the general meeting of partners. Competences of general meeting, procedures for carrying out decisions, responsibility and competences of directors and composition and functions of governing bodies are stipulated in the company charter.
 
Joint Stock Companies (JSC) are typically enterprises with large capital, although there are no legal requirements for it. In Georgia, some types of enterprises, such as banks and insurance companies, are legally obligated to hold this legal form. The authorized capital of a JSC is divided into shares of equal par value. A share is a bond confirming obligations of a joint-stock company before the partner (stockholder) and the stockholder’s rights in the company. Management bodies of a JSC include General Meeting, Supervisory Council, and Directors. 

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