Georgia's Virtual Zone: 5% Tax for IT Companies

If your revenue comes from exporting IT services or products, Virtual Zone status drops your corporate income tax from 15% to 5%. Here is who actually qualifies — and how not to lose the status.

What Virtual Zone is

Virtual Zone (Georgian: ვირტუალური ზონის პირი) is a special tax status for IT companies, introduced in 2011 and reworked in 2022. The status applies to the activity, not to the company as a whole: IT services delivered to clients outside Georgia.

The rates

Who qualifies

The activity must involve developing software or digital products:

• Web and mobile app development
• SaaS and cloud services
• Games and game engines
• AI/ML services
• Maintenance and support of your own software

Does not qualify: reselling third-party IT services as an agency, hosting third-party content, marketing (even digital), consulting that does not produce software.

Application documents

Processing time is up to 10 business days. The decision is issued free of charge.

Common mistakes

• Applying as an IE. Virtual Zone is only available to LLCs. IEs do not qualify.
• Activity description is too vague. "IT services" will be rejected. Be specific: "development of a SaaS platform for warehouse management".
• Part of the revenue comes from inside Georgia. That part is taxed at the standard rate. Keep separate accounting.
• Staff working on other projects. All operating expenses must be tied to the qualifying activity.

"Virtual Zone is not a loophole, it is a full-fledged status. If you genuinely export an IT product — get it. If you are stretching consulting work to fit it, the tax office will revoke the status retroactively."

Alternative: International Company

Since 2022 there is another status — International Company. It offers a 5% corporate income tax rate plus 0% on dividends, but the requirements are stricter: 2+ years of track record for the parent company, minimum employee salary of $1,500. It suits larger IT teams.