Great business opportunities for IT companies in Georgia

pict_Doing business with IT companies in Georgia

The advent of the Internet has opened up many opportunities for companies around the world. And among these many possibilities, software development is in pole position. Increasing globalization is driving IT companies to outsource their software development projects to low-cost countries with expertise in this field. Software export is the main source of revenue for a large number of IT companies operating worldwide. However, in most jurisdictions, income from the export of software outside a country's borders is taxable. This can affect the profitability of companies, as they will end up paying a significant portion of their profits in taxes. There is one country that does not levy taxes on IT business income, Georgia in the Caucasus.

Virtual zone in Georgia

This is a Free Zone where many tax incentives are offered to IT companies. The most significant is the tax exemption for revenues from the export of software. This is very attractive for foreign companies that develop software and export it. The Georgian virtual zone is a legal entity to which Georgia has granted special status.

Main features of the virtual zone in Georgia

  • If a company located in the virtual zone offers software development services to foreign customers, export revenues will be exempt from 18% VAT and 15% corporate tax.
  • Export duties on software exported from the customs territory of Georgia shall be exempt.
  • All expenses that generate revenue from the export of software outside or within Georgia's borders are deducted from the company's gross income.
  • Companies operating within the virtual zone in Georgia do not need licenses, permits or regulatory documents.

In addition to the above characteristics, Georgia also offers an appropriate business environment for IT companies (also for others) to take advantage of. The country has received excellent reviews from international rating agencies such as the World Bank, the International Monetary Fund, the European Union and others. These various indices show how easy it is to do business in Georgia (6th of the ease doing business 2018, up 3 places) and its low tax rate in industry and other sectors of activity are the advantages that companies can enjoy. Add to that, the strength of Georgia's financial institutions and you have an ecosystem that is very good for business.

Other factors make Georgia an attractive destination for investment in the information technology sector

  • A favorable time zone that allows us to respond to customers from the United States, the EU, Canada, China and Australia.
  • Favourable trade treaties signed with major trading blocs such as the EU, CIS and China and others that provide a level playing field for companies based in Georgia.

The competition from IT companies worldwide is so intense that the creation of an IT company in the virtual zone in Georgia can greatly help a company to remain competitive and ahead of the competition.