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10. INCENTIVES AND SPECIAL REGIMES

There are a number of incentives available to companies in Georgia based on geographical areas of investment, level of investment, industry type, etc.

Foreign Trade Zone / Free Industrial Zone (‘FIZ’)

A FIZ company is a company established under the laws in the free industrial zones area. Presently, there are three free industrial zones in Georgia. Companies incorporated in these zones with the status of a FIZ enterprise are granted certain tax concessions. The activities of such companies are subject to simplified currency regulations and license / permit-related procedures etc. FIZ companies are generally engaged in the manufacturing and export of goods outside Georgia.

Following incentives are available to companies located in a FTZ / FIZ:

  • Corporate income tax exemption on profits/income earned from permitted activities conducted in a FIZ;
  • Exemption from VAT and custom duties on import of foreign goods into a FIZ;
  • Operations carried out in a FIZ are exempt from VAT; and
  • No property tax is levied on property located in a FIZ.

However, a FIZ company is required to pay tax at a rate of 4% of income received / market price of goods on goods supplied/received to or from a resident company, other than FIZ companies.

International Company

An International Company is a Georgian entity that performs permitted activities and derives income only from those activities (see Sec. 1.2.3.).

An International Company is eligible for the following tax incentives:

  • A reduced corporate income tax rate of 5%;
  • Exemption from withholding tax on distribution of dividends to its shareholders;
  • Exemption from property tax (except for land) if the property is intended for use or is used for the permitted activities;
  • VAT exemption for services provided by an International Company to non-residents; and
  • A reduced 5% individual income tax rate for employees of an International Company.

Effective 8 October 2020, an International Company is permitted to perform the activities specified in Order No. 619, which include activities related to information technology and shipping sectors, such as:

  • Software publishing, computer programming, consultancy and related activities, computer management activities, other information technology and computer service activities, etc.;
  • Production and/or delivery of a digital product, including software support and delivery of an updated version;
  • Website development and/or delivery;
  • Web hosting, remote maintenance of software and hardware;
  • Software and relevant updates;
  • Remote administration of the system;
  • Online delivery of allocated memory capacity; and
  • Commercial and technical services related to the shipping sector such as renting a ship with or without a crew (bareboat charter), route planning and/or analysis, stalling time counting, disbursement report analysis and management, etc.

International Trading Company (Special Trade Company)

Special trade companies (‘STC’) are permitted to conduct approved activities within an approved warehouse. STC are permitted to supply and re-export foreign goods, as also purchase foreign goods from an entity without such status for further supply or re-export.

The status of ‘special trade company’ is granted for the relevant calendar year and subsequent calendar years. A foreign company already conducting economic activity through a permanent establishment (‘PE’) in Georgia is required to additionally register a separate PE for performing approved services in order to acquire special trade status.

A corporate income tax exemption is available on profits/income earned from permitted activities, except on the sale of fixed assets.

International Financial Company

Georgia abolished International Financial Company status in 2019 and introduced the International Company Regime. Previously, an International Financial Company was a financial institution that was granted the status of an international financial corporation, which provided financial services to overseas customers.

These companies were eligible for exemption from CIT on income derived from financial operations, financial services and the sale of securities issued by non-resident persons. CIT exemption was also available on profits derived by an investment fund from supply of financial instruments and/or from financial transactions and/or financial services, provided the investment fund was an international financial company.

Virtual Zone Company

A Virtual Zone Company is a legal entity that is engaged in specified information technology activities and is granted a status of ‘Virtual Zone Company’.

These companies are eligible for exemption from corporate income tax on the distribution of profits derived from the supply of services related to information technology outside Georgia.

Tourist Zone Company

A Tourist Zone Company is an entity that develops hotels in accordance with the rules prescribed under the laws of Georgia. The activities of a tourist zone company include the building of hotels, the supply and leaseback of hotel assets and rendering buildings operational as a hotel.

Tourist Zone Companies are eligible for the following benefits:

  • Exemption from corporate income tax on the distribution of profits derived from rendering of hotel services until 1 January 2026;
  • Exemption from corporate income tax on the value of land gratuitously given to Tourist Zone Company; and
  • No property tax is levied on the property of a tourist company until 1 January 2026.