Georgia has become a very attractive destination for investors due to its favourable business environment. The country scores high on many indices such as the World Bank's (6th place in 2018, up 3 places) for ease of doing business, lack of controls, low levels of corruption, low levels of taxation, free entry and exit of capital, influx of tourists. In fact, Georgia's geographical location is a strategic bridge between the Asian and European continents and a destination now sought by investors.
One of the major advantages for starting a business in Georgia is the fact that you do not need to visit or stay in the country. The entire procedure can be done remotely using POA. On the other hand, companies are looking for safe destinations to keep their hard-earned money away from the prying eyes of national tax authorities, so Georgia may be the right place for you. Georgia has not signed any of the OECD measures concerning the global automatic exchange of financial information, such as the TIEA, or banking information, such as the AEOI. So, if you are looking for a favourable country to preserve your money and do business in an uncontrolled regime, then Georgia should be a preferred destination, a safe port of call in deep waters.
Among the many industrial sectors that are doing well in the global economy, information technology is undoubtedly at the top. This is due to the fact that the IT industry meets the needs of all other sectors by offering customized products and services. IT companies do not need to install expensive machines or incur large overhead costs. As operating costs are lower than in other industries, information technology has become one of the most favourable sectors for creating jobs and making profits. However, the information technology sector also needs incentives and a level playing field to be competitive at the highest degree. This is what Georgia offers in the form of Virtual Zones.
According to Georgian law, a virtual zone is a place where the information technology company is allowed to operate and benefits from a multitude of tax incentives and business-friendly policies. The Act defines a company operating in a virtual area as a legal entity with activities related to research and development, support, design, production and implementation of computer and technological systems.
Since the virtual zone offers many advantages, tax cuts and a generally favourable business environment, IT companies should consider investing here in this Virtual Zone.
If your IT company provides services to foreign customers, the income is exempt from VAT (18%) and corporate income tax (15%). In addition, income will not be subject to any tax if it is not distributed as dividends.
Dividends paid to a non-resident shareholder will be taxed at the nominal rate of 5%. However, dividends paid to a Georgian shareholder will not be included in the tax base.
The IT company does not need to employ staff in Georgia, with the exception of the director.
While the global economic environment seems more and more complicated with more and more regulations, and higher and higher prices, the establishment of an IT company in a virtual area of Georgia will give you a lot of competitiveness and will be lucrative, for the benefit of your customers and shareholders.