Georgia has positioned itself as a competitive and innovation-friendly jurisdiction for IT companies seeking tax-efficient operational frameworks. As part of its broader economic strategy, the country offers two distinct preferential regimes aimed at attracting IT businesses: the Virtual Zone Person (VZP) status and the International Company (IC) status. Both frameworks are designed to stimulate the local tech sector, drive foreign direct investment, and bolster Georgia’s role as a regional digital hub.
This article provides a structured analysis of these two regimes, highlighting their legal foundations, operational scope, tax benefits, and practical implications for investors. While the two regimes share the goal of incentivizing IT tax incentives in Georgia, they target different profiles of companies and offer different tax advantages. A critical commonality is that both regimes require companies to carry out their core activities from within Georgia and to ensure that services or products are sold to foreign markets.
Virtual Zone Person (VZP)
The Virtual Zone Person status is Georgia’s original preferential regime for IT companies. Introduced in 2011, it specifically targets companies engaged in the development of information technologies.
To qualify for VZP status, a legal entity must be established in Georgia and be engaged in producing IT products as defined under the Tax Code. Eligible activities include the study, support, development, design, production, and introduction of computer information systems, culminating in the creation of software products. Crucially, both the management and the actual creation of these products must occur within Georgia, employing local personnel or resources. The resulting software products must be sold to non-resident customers, as only income derived from exports benefits from the VZP tax incentive.
From a tax perspective, VZP status provides a complete exemption from corporate income tax (CIT) on profits earned from the export of IT products. Dividends distributed by a VZP remain subject to Georgia’s standard 5% dividend withholding tax; however, under Georgia’s extensive network of double taxation treaties (covering 58 jurisdictions across Europe and Asia), this rate may be reduced to 0% in many cases. Conversely, revenue generated from domestic sales or from activities unrelated to IT product exports is subject to the standard 15% CIT rate.
Employee remuneration is also treated under the general regime: salaries paid to VZP employees are subject to the standard 20% personal income tax (PIT).
Obtaining VZP status is relatively straightforward, with companies applying electronically through the Ministry of Finance’s online portal. While the status is typically granted automatically, the proper use of the regime and its associated exemptions remains subject to subsequent state control and verification.
The VZP regime is particularly advantageous for small and mid-sized Georgian-based software developers focused exclusively on export markets.
International Company (IC)
Introduced in 2020, the International Company status represents a broader, modernized alternative to the VZP regime. Targeting larger multinational IT groups and diversified technology service providers, the IC framework extends benefits to a wider range of activities while offering deeper fiscal incentives.
To qualify, a Georgian entity must either itself, or through its parent company, demonstrate at least two years of relevant operational experience. Eligible activities, as outlined in Ordinance N619 of the Georgian Government, include not only software production but also IT consulting, remote maintenance, hosting services, digital content provision, and various other digital services. Like the VZP, the IC regime requires that these activities be performed physically from Georgia, ensuring a substantive local presence, and that services are primarily delivered to non-resident clients.
The IC regime’s tax benefits are extensive. Corporate income tax is reduced from the standard 15% to just 5% on all profits derived from permitted activities. Dividends distributed from such profits are fully exempt from withholding tax, enhancing Georgia’s attractiveness as a regional service hub. Notably, personal income tax on salaries is reduced from 20% to 5%, significantly lowering employment costs – a particularly valuable advantage for IT firms, where payroll constitutes a major expense.
Further enhancing its competitiveness, the IC regime allows companies employing Georgian citizens to further reduce their taxable profit by deducting the amount of salaries paid to such employees from the corporate tax base. In practice, this “double deduction” can lower the effective corporate tax burden below the nominal 5% rate, depending on the company’s cost structure.
Applications for IC status must be submitted to the Georgian Revenue Service, where eligibility is carefully assessed with respect to the applicant’s activities and substantive presence in Georgia.
The IC regime is particularly suited for international IT service providers establishing regional hubs, as well as for multinational companies relocating their IT functions to Georgia to service intra-group or external clients.
Comparative Overview
While both the Virtual Zone Person and International Company regimes offer substantial tax incentives, they cater to distinct operational models. For a broader look at how these fit alongside Georgia’s other preferential statuses, see our Georgia Special Tax Regime Guide.
The VZP regime offers a full exemption from corporate income tax on export-derived IT product profits, with dividend distributions taxed at 5% (or potentially lower under double taxation treaties). Salaries, however, remain subject to the standard PIT rate, and the regime is limited to software production activities destined for foreign markets.
By contrast, the IC regime imposes a reduced 5% corporate income tax on permitted activities, exempts dividend distributions from withholding tax, reduces PIT on employee salaries to 5%, and offers a further deduction of Georgian employee payroll from taxable profits. These combined benefits make the IC regime particularly advantageous for firms with significant local employment costs.
Both regimes share critical operational requirements: economic substance in Georgia (i.e., genuine operational presence) and a business model centered on providing services or products to non-resident customers.
Finally, since companies operating under either regime typically supply services abroad, their transactions generally fall outside the scope of Georgian VAT. Nevertheless, both VZPs and ICs are entitled to deduct input VAT incurred domestically on costs such as lease payments, professional services, and other overheads.
Georgia’s Virtual Zone Person and International Company regimes underscore the country’s strategic ambition to become a regional technology and innovation hub. By offering significant tax exemptions and reductions across corporate profits, dividends, and employment costs, Georgia provides an attractive platform for both startups and multinational IT service providers.
Companies should evaluate their operational model and long-term objectives carefully when selecting between the two regimes. Export-focused software developers are likely to find the VZP regime most beneficial, while diversified IT service providers and international groups with significant payroll expenses may find the International Company status far more advantageous.
Whichever framework is selected, both regimes require a genuine operational presence in Georgia and a focus on serving non-resident markets – fundamental pillars of Georgia’s vision of a modern, export-oriented digital economy.
Note: This article is based on Georgian legislation and public data as of August 2026. Companies are encouraged to seek professional tax advice tailored to their specific circumstances before relying on the regimes described above.