Georgia's Virtual Zone: the 5% Tax Status for IT Companies, Updated

The Virtual Zone is Georgia's main tax card for IT: 5% profit tax instead of 15%, 0% VAT on exports, and a status granted free of charge within ten business days. Updated breakdown: what it is, who qualifies, what to file, where applicants fail, and how the status relates to the 2026 rules for foreigners.

Quick answer

The Virtual Zone (ვირტუალური ზონის პირი) is a tax status for Georgian LLCs exporting IT services and products: 5% profit tax, 0% VAT on exports, 5% on dividends, an effective rate around 9.75%. The status attaches to the activity, not the whole company: sales to Georgian clients fall outside the benefit. The application to the Ministry of Finance is free; review takes up to 10 business days. LLCs only; IEs do not qualify.

What the Virtual Zone is

The regime has existed since 2011 (updated in 2022) and targets companies building IT products and services for foreign customers. The key condition is export: services or products must leave Georgia. Whatever you sell to Georgian clients is taxed on general terms and needs separate accounting.

The rates

Who qualifies

A fit: web and mobile development, SaaS and cloud services, games and game engines, AI/ML services, support of your own software. Not a fit: agency-style IT services, reselling third-party hosting, digital marketing, consulting without building software. The line is simple: the benefit rewards your own software and its export, not IT words in an activity description.

The application package

• a registered LLC in Georgia (an IE does not qualify, see the comparison);
• an activity description in Georgian and English;
• product evidence: repository, app or demo links;
• a client contract (one is enough);
• the application to the Ministry of Finance;
• charter capital confirmation on the bank account.

Review takes up to 10 business days; there is no state fee.

Common mistakes

• an IE applies (LLCs only);
• a vague activity description, "IT services", instead of a concrete product and export destination;
• Georgian revenue mixed with export revenue; separate accounting is required;
• staff working on unrelated projects; expenses must belong to the exempt activity.

What 2026 changed for foreigners

For foreigners, 2026 settled around the Virtual Zone more calmly than March suggested: the April 16 amendment expressly carved company owners and managers out of the work permit requirement, so a VZ founder needs no permit to run their own business. The permit stays relevant for hired foreign employees (filed by the company as employer) and for anyone planning a work residence permit, where an approved permit remains a required document.

A single-member Virtual Zone: solo works

The "hire a team" requirement is outdated: recent practice allows a single-member VZ company — a solo developer forms an LLC with themselves as the only member. Two conditions: the member is a Georgian tax resident (actually living here), and the services are exported abroad. For a freelancer above the IE turnover cap, this is the main route to keep a low rate.

And a warning from the same discussion that we co-sign without hesitation: the VZ consulting market is full of "specialists" whose setups later need rebuilding. The lawyer in the thread describes a stream of botched configurations; if you go for the VZ, hire someone who can show approved cases.

The alternative: International Company status

Since 2022 there is also the International Company regime: the same 5% on profit but 0% on dividends. The bar is higher: a parent company with 2+ years of history and a minimum employee salary from $1,500. For mature teams moving a real office to Georgia it can beat the VZ; run the numbers on your own company. The community carries a rumor that the VZ will eventually give way to ICS as the go-to IT regime; unconfirmed, and per recent practice VZ applications keep getting approved. If you plan long-term, a sensible strategy is to start with a VZ and keep ICS as the next step.

Frequently asked

Can an IE get the Virtual Zone? No, LLCs only. A solo developer under 500,000 GEL of turnover is often better off as an IE at 1%; compare both before registering.

How much and how long? No state fee; up to 10 business days at the Ministry of Finance. The real costs are LLC registration (from 580 GEL) and preparing the activity description.

Does selling to Georgian clients kill the status? It does not, but the benefit excludes that revenue: keep it in separate accounting, taxed on general terms.

Is 5% all I pay? No: taking profit out adds 5% on dividends, landing around 9.75% effective. Still well below the standard ~19-20%.

A free 15-minute consultation: we will check whether your activity fits the Virtual Zone and price your effective rate. Telegram @GeoExpertsSaqartvelo or +995 551 278 585.