LegalGELegalGE
...

Corporate Tax Planning

How can IT companies reduce corporate tax in Georgia?

IT companies exporting services can apply for "Virtual Zone Person" status (0% Corporate Tax) or "International Company" status (5% Corporate Tax, 0% Dividend Tax, 5% Wage Tax). The International Company status is generally more beneficial but has stricter substance and experience requirements (2 years of global experience). We help analyze which fits your business model best.

What are the benefits of a Free Industrial Zone (FIZ)?

Companies registered in a Free Industrial Zone (FIZ) are exempt from Corporate Profit Tax on income earned from permitted activities (manufacturing, processing, trading within FIZ/export). They also pay no VAT on electricity or imported goods. However, trading with mainland Georgia is taxed at 4% of invoice value. FIZ is ideal for manufacturing and international trading/logistics hubs.

Can I defer taxes indefinitely by reinvesting profits?

Yes, under the standard Georgian tax regime, profit tax is only due upon distribution. As long as you keep the profits in the company for operational needs, investments, or buying assets, no corporate tax is payable. This allows businesses to compound their growth tax-free until the shareholders decide to take cash out.

Does Georgia have Double Taxation Treaties with EU countries?

Yes, Georgia has an extensive network of Double Taxation Avoidance Treaties (DTAs) with over 58 countries, including most EU member states, the UK, China, and others. These treaties allow for reduced withholding tax rates on dividends, interest, and royalties, preventing you from paying tax on the same income in two jurisdictions.

Reading Time

2 min

Published

...

Corporate Tax Planning is a strategic tool helping businesses legally reduce tax burdens and increase profitability. This does not mean tax evasion, but rather the prudent use of incentives and optimization mechanisms provided by tax legislation (tax avoidance). Georgia's liberal tax environment, including the "Estonian Model" and special economic zones, offers broad planning opportunities. However, the line between legal optimization and violation is often thin. Qualified tax planning requires deep analysis of the business model and long-term vision to avoid provoking future tax disputes.

Our service includes developing an individual tax strategy. Specialists offer:

  • Optimizing business structure (holding, subsidiary, branch) for tax efficiency;
  • Selecting special tax regimes (Virtual Zone, International Company, Free Industrial Zone);
  • Planning cross-border operations using Double Taxation Avoidance Treaties;
  • Reinvestment strategy to defer profit tax;
  • Analyzing tax consequences of mergers and demergers;
  • Calculating tax efficiency of employee incentive schemes (e.g., stock options).
This service helps save financial resources and increase business value.

Tax planning is necessary in specific situations. For example, an IT company serves foreign clients. By obtaining "Virtual Zone" status, it can be exempt from profit tax on exported services. Another example is a real estate developer wanting to contribute land to capital — with correct planning, VAT liability can be deferred or reduced. Also, for international groups, a dividend repatriation strategy is crucial to minimize withholding tax.

The legal framework relies on the "Tax Code of Georgia" and numerous bylaws regarding special regimes. Also important are OECD recommendations and BEPS (Base Erosion and Profit Shifting) initiatives that Georgia is joining. A lawyer ensures that your tax strategy is not only profitable but also resilient to changes in international and local regulations.

The process begins with business diagnostics. The lawyer analyzes cash flows, contracts, and partners. Based on this, several scenarios with tax burden calculations are created. After choosing the best option, implementation follows (e.g., registering a new company, modifying contracts). With the help of a specialist on Legal.ge, you gain a strategic advantage in the market.

Legal.ge is a platform giving you access to high-class tax strategists. Taxes are one of the biggest business expenses. Manage them wisely and legally with Legal.ge.

Updated: ...

Specialists for this service

Loading...