2022 Georgia Tax Guide: Pay 0-5% tax as a foreigner in Tbilis

Pictured above is the Bridge of Peace in Tbilisi, Georgia

Region: Caucuses
Population: 3.7 million
Capital: Tbilisi (1.1 million)

In this guide, we will go through Georgia’s most attractive tax regimes: Individual Entrepreneurs which carries a 1% revenue tax for the self-employed, as well as companies with Virtual Zone and International Companies Status, which carries a 0-5% corporate tax.

Georgia's 1-3% revenue tax works for self employed individuals, up to 500,000 GEL ($172,000)

Tax rate: 1% on your business' revenue up to 500,000 GEL ($172,000) for Individual Entrepreneurs (what self employed individuals are known as in Georgia), who qualify for Small Business Status. If you exceed the revenue limit, you will pay 3% on your total revenue. If you dramatically exceed the 500,000 GEL limit, or if you exceed the limit for over 2 years consecutively - you will instead pay a 20% tax on profit. As this is a self employed structure, there are no dividend taxes. Once you have paid the 1% tax - that's it! For Americans, the Foreign Earned Income Exclusion (FEIE) is approximately $108,000 - which means you can legally pay 1% tax on your first $108,000, before triggering any US taxes.

Who it works for / limitations: This scheme works best for ‘genuinely’ self employed individuals. The Georgian tax authorities specifically exclude ‘artificially’ self-employed individuals from this scheme. By artificially self-employed, the Georgian tax authorities refer to individuals who in reality work exclusively for one client only, therefore being a de-facto employee. If you disregard this, you can be at risk of being charged a 20% profit tax instead of 1% on revenue. We can clarify your eligibility and ensure you have the correct structure to qualify, over a consulting call.

VAT: So long as your clients are all non-Georgian sourced, no VAT is payable. However, even though no VAT has to be paid, you might still have to register and declare VAT.

Social / health insurance: Does not apply. However if you are a Georgian resident, you need to set aside 2% of revenue into an individual pension account.


Georgia’s 0-5% corporate and dividend tax for IT companies

Georgia also has very favourable corporate taxes incentives, aimed at incentivising IT and software companies to relocate to Georgia. Qualifying IT companies can incorporate either as a Virtual Zone Company (0% corporate tax and 5% dividend tax) or International Company Status (5% corporate tax and 0% dividend tax).

Granting of Virtual Zone or International Business Company status is subject to approval by the Georgian Revenue Service. The general rules is that: you must be able to demonstrate actual substance in conducting IT / software development work, with a degree of physical presence in Georgia. This includes having a local office and some employees, although there is no firm requirement that you as the Director must be in Georgia.

The requirements and tax benefits of a Virtual Zone Company vs. an International Company Status varies and are nuanced. We can clarify which better suits your exact situation over a consulting call, with the help of our Georgian tax lawyers.


Apart from taxes, Georgian’s cuisine, wine and unique architecture is also worth appreciating

Entry requirements to Georgia

Georgia has very liberal visa entry requirements, allowing citizens of 98 countries (including almost every Western and developed country) to enter and work without a visa for up to 1 year. This can easily be extended through obtaining a residency permit with minimal cost, which you will be able to do after registering yourself as a self-employed individual or by incorporating and employing yourself, with a minimum salary.


Tbilisi's charming skyline:

How Georgia compares against Dubai and other tax havens - beyond tax savings

I believe Georgia to be a highly underrated country both for living, doing business and tax savings - especially for IT workers, software developers and digital nomads. It's tax incentives rivals that of tax havens, yet it carries key advantages which most traditional tax havens do not:

1. Georgia is renowned for its streamlined government bureaucracy and is ranked 7th amongst 190 states in the World Bank's Ease of Doing Business ranking. By contract, its neighbour the United Arab Emirates (UAE) is ranked 16th and Panama is ranked 86th. The cost of incorporation and obtaining residency in Georgia, is a small fraction of what it would cost in Dubai.
2. The quality of banking services in Georgia is world class. A deposit of ~$10,000 will grant you private banking service with a personal banker, where you will experience better services than Dubai or Caribbean banks. Furthermore, since Georgia isn’t commonly associated with being a tax haven, having a Georgian bank account and receiving transfers to and from a Georgian bank account, is treated with considerably less suspicion by banks in other countries, than a UAE or Caribbean bank account would.
3. There is a decent pool of young, high skilled and affordable tech talent, especially with the arrival of Ukrainians and Russians in 2022. You will not find this in traditional tax havens.
4. Citizens from 98 countries can enter Georgia and establish a business in Georgia without any visa requirements. By basing yourself in Georgia, you will also qualify as a Georgian tax resident and pay 0% capital gains tax on the sale of crypto, stocks and other equities.
5. Lastly, having personally hired and worked with people from over 20 countries (including nearly every country in Central & Eastern Europe), Georgians are some of the most sincere, warm and reliable people I've encountered, making it a very pleasant environment to do business and live.

With a deposit of $10,000 USD, you can qualify for private banking services at Georgia’s SOLO bank and earn ~10% p.a. on your bank deposit. Pictured below is a SOLO bank branch in Tbilisi: