International Company Status in Georgia: 5% tax regime for IT and maritime firms

Georgia offers a preferential tax regime known as International Company Status for Georgian companies engaged in qualifying information technology and maritime service activities.

Companies holding this status benefit from:

• 5% corporate profit tax instead of the standard 15%;
• 5% personal income tax on employees’ salaries instead of 20%;
• 0% withholding tax on dividends;
• exemption from property tax, except for land, on property intended for or used in permitted activities.

What is International Company Status?

International Company Status may be granted to an existing Georgian enterprise that carries out activities permitted under the legislation and meets the applicable eligibility requirements.

It is not a separate legal form or a type of company registered at the incorporation stage. Instead, it is a special tax status granted to an already-established Georgian company by a decision of the Government of Georgia.

The status is granted for an indefinite term and takes effect from the beginning of the month in which it is granted. The Revenue Service maintains a unified electronic register of companies holding International Company Status.

IT companies supplying software or related services abroad may also wish to compare this regime with Georgia’s Virtual Zone Person status.

The tax benefits

The principal advantage of International Company Status is the reduced tax burden available under the Georgian Tax Code:

• 5% corporate profit tax, compared with the standard 15% rate. Georgia applies the “Estonian model,” under which corporate profit is generally taxed when distributed or when a payment or expense is treated as a distribution of profit. For an international company, the taxable amount is calculated by dividing the relevant payment or expense by 0.95, after which the 5% tax rate is applied.
• 5% personal income tax on salaries, compared with the standard 20% rate, for employment income earned by individuals working for the international company.
• Exemption from property tax, except for land, on property intended for or used in carrying out the company’s permitted activities.
• Exemption for dividends: dividends paid by an international company are not subject to withholding tax and are not included in the recipient’s gross income.

Who is eligible?

International Company Status may be granted to a Georgian enterprise where any one of the following conditions is met:

• the Georgian enterprise itself has at least two years’ experience in the permitted activity for which it is applying;
• the Georgian enterprise acts as the representative in Georgia of a non-resident enterprise that has at least two years’ experience in the relevant permitted activity carried out by the Georgian enterprise; or
• more than 50% of the Georgian enterprise’s shares are held by a partner enterprise that independently has at least two years’ experience in the relevant permitted activity. Where there is more than one qualifying partner enterprise, each partner must satisfy the experience requirement separately.

In addition to demonstrating the required experience, the applicant must maintain genuine economic substance in Georgia. It must carry out the permitted activity and its core income-generating activities in Georgia, have adequate human resources with the necessary qualifications, and incur appropriate operating expenses in Georgia.

The status is available only to companies taxed under Georgia’s standard distributed-profit system, where corporate tax generally becomes payable when profits are distributed rather than when they are earned.

Permitted activities

The legislation divides the permitted activities into two main categories: information technology and digital services and maritime services.

Information technology and digital services

Permitted IT and digital activities include:

• software publishing, including computer games and other software (codes 58.2, 58.21 and 58.29);
• computer programming, IT consultancy, computer-facilities management and other IT and computer-related services (codes 62.0, 62.01, 62.02, 62.03 and 62.09);
• production or delivery of digital products, including software support and updated versions;
• website development or delivery;
• web hosting;
• remote maintenance of software and hardware;
• provision of software and related updates;
• provision of images, text and information for access to databases;
• remote system administration;
• online provision of allocated data-storage capacity;
• access to or downloading of software and updates, including accounting, purchasing and antivirus software;
• banner-ad-blocking software;
• downloadable drivers connecting computers to peripheral devices;
• automatic online installation of website filters; and
• automatic online installation of firewalls.

These IT and digital services must be provided under a service contract.

Maritime services

Permitted maritime activities include commercial and technical services performed by a shipowner or otherwise connected with ship ownership, such as:

• chartering ships with or without a crew, including bareboat chartering;
• voyage planning and analysis;
• providing voyage instructions to a ship’s captain, as agreed with the charterer;
• calculating laytime and analysing or managing disbursement accounts;
• managing cargo-related claims and disputes involving commercial, legal or chartering matters;
• organising orders for the construction of new ships;
• arranging the purchase and sale of used ships;
• supervising the physical condition of ships;
• supplying ships with technical parts or provisions;
• coordinating shipbuilding, docking and repair activities;
• conducting inspections required by industry regulators; and
• ensuring compliance with the International Safety Management Code, flag-state and port-state control requirements, and classification-society rules.

The service-contract requirement applies specifically to the listed IT and digital services, not to the maritime-services category.

The 2% limit on other income

An international company may receive a limited amount of income from activities outside the permitted scope. During a calendar year, such income—calculated excluding VAT—must not exceed 2% of the company’s revenue from permitted activities.

If the company exceeds this threshold, its International Company Status may be revoked. In this case, the revocation may apply retroactively from the date on which the status was originally granted, making strict monitoring of non-permitted income especially important.

Qualifying expenses

An international company may reduce the amount of distributed profit subject to the 5% profit tax by certain qualifying expenses incurred in Georgia.

There are two categories:

• salary expenses paid to employees who are both Georgian citizens and Georgian tax residents; and
• expenses for scientific research, design and experimental-development services connected with the company’s permitted activities.

These are special reductions available under the International Company regime. They reduce the taxable distributed-profit amount on which the 5% profit tax is calculated. Therefore, “qualifying expenses” is more precise here than the general term “deductible expenses.”

Application process

The application is submitted to the Revenue Service, either in writing or electronically, using the form approved by the Minister of Finance.

The application must include:

• the company’s registration details, including its identification number, name and legal form;
• its legal and actual addresses;
• the permitted activity or activities for which it is applying;
• the place from which the relevant services will be provided;
• the submission date and the signature of an authorised representative; and
• documents demonstrating the required experience and performance of the relevant activity.

If the activity requires a permit, a copy of the relevant permit must also be submitted. The Revenue Service may request additional information where necessary.

Review and decision

The Revenue Service reviews the application within 10 days. If information or documents are missing, it may give the applicant a reasonable period—no longer than 10 days—to correct the deficiency. If the deficiency is not corrected within that period, the Revenue Service may leave the application without consideration and decline to forward it.

If the application satisfies the requirements, the process continues as follows:

1. The Revenue Service forwards the application and supporting documents to the Ministry of Finance.
2. The Ministry reviews the materials and submits them, together with its proposal, to the Government of Georgia.
3. The Government makes the final decision to grant or refuse the status.

If approved, the status is granted through an individual Government decision. “Government decision” is more accurate here than “ordinance,” because the status is granted to a specific applicant by an individual administrative act.

Losing the status

International Company Status may be revoked where:

• the company voluntarily applies to surrender it;
• income from non-permitted activities exceeds the 2% threshold;
• the company no longer satisfies the experience, substance or taxation requirements; or
• the company is granted Innovative Startup Status.

When revocation takes effect

The effective date depends on the reason:

• Voluntary revocation: from the beginning of the month in which the revocation decision is made.
• Innovative Startup Status: from the first day of the month following the decision granting that status.
• Breach of the 2% limit or loss of eligibility: retroactively from the date on which International Company Status was originally granted.

Retroactive revocation is particularly significant because it may require the company’s tax liabilities for the entire affected period to be recalculated under the ordinary tax rules.

Once the Revenue Service identifies grounds for revocation, it submits the relevant materials to the Ministry of Finance within 10 days. The final decision is made by the Government of Georgia, based on the Ministry’s recommendation.

A note on legislative changes

The eligibility requirements, permitted activities and application procedures may be amended from time to time. The rules in force on the date of the application, and throughout the period in which the company holds the status, will apply.

Before applying or making business decisions based on this regime, check the latest legislation.

Frequently asked questions

Who can get International Company Status in Georgia?

A Georgian enterprise that carries out one of the permitted IT or maritime activities and has at least two years of experience in it. The two-year track record can come from the company itself, from a non-resident enterprise it represents in Georgia, or from partner enterprises that each separately own more than 50% of it. The company must also conduct its core income-generating activity in Georgia with adequate qualified staff and real operating costs.

What taxes does an international company pay?

Profit (corporate income) tax is 5% instead of the standard 15%, charged on distribution under Georgia's distributed-profit model. Salaries are taxed at 5% personal income tax instead of 20%. The company is exempt from property tax (except on land) for property used in its permitted activities, and dividends it distributes are not taxed at source and are not included in the recipient's gross income.

Which activities qualify?

Two broad groups. IT: software release (including games), computer programming and consulting, delivery of digital products and updates, website development, web hosting, remote system administration and similar online services. Maritime: commercial and technical services connected to ship ownership, such as bareboat chartering, route planning, ship sale-and-purchase brokerage, supervising shipbuilding and repair, and ensuring ISM Code compliance. The full list is in Annex 2 of Ordinance No 619.

How do I apply for the status?

You apply to the Revenue Service (under the Ministry of Finance) on the form set by the Minister of Finance, identifying the permitted activity and where the services are provided, with documents proving the two-year experience. The Revenue Service checks the application within 10 days and, if it complies, forwards it through the Ministry of Finance to the Government of Georgia, which makes the final decision by ordinance.

Can an international company earn income from other, non-permitted activities?

Only within a narrow tolerance. Revenue from activities other than the permitted ones (excluding VAT) must not exceed 2% of total revenue from the permitted activities in a calendar year. Crossing that threshold is a ground to revoke the status — and revocation in that case takes effect retroactively, from the date the status was originally granted.

Is the status permanent?

It is granted for an indefinite term and takes effect from the start of the month in which it is granted. But it can be revoked — on the company's own request, if non-permitted income exceeds the 2% threshold, or if the company stops meeting the eligibility and substance conditions. Voluntary revocation applies from the start of the month of the decision; the other two grounds apply retroactively to the grant date.