What is the “virtual zone” of Georgia: definition and main goal

The virtual zone of Georgia is a special tax status developed to attract and support companies operating in the information technology sector. This status can be considered as a license or permission to conduct business for IT companies of various scale, from freelancers to medium-sized enterprises. The key feature of the virtual zone is that tax benefits provided to companies with such a status apply exclusively to income received from the provision of services or selling products to foreign clients outside Georgia. Thus, the company registered in the virtual zone can significantly optimize its taxation if its activities are focused on the international market.

The main goal of creating a virtual zone is to stimulate investment and development of an IT sector in Georgia. The Georgian government seeks to create favorable conditions for doing business in the field of high technologies, which, in turn, should contribute to the growth of the national economy and increase its competitiveness in the international arena. This strategic approach is aimed at attracting both startups and already held IT companies, offering them significant tax advantages and simplified administrative procedures.

It is important to note that the virtual zone functions in the context of a common favorable business climate in Georgia. The country occupies high positions in international ratings of ease of business, for example, 7th place according to the World Bank. This is due to factors such as a business-oriented legal system, a simple procedure for registering companies, the rapid opening of bank accounts, a low level of corruption and a high level of confidentiality. The combination of these factors with tax stimuli of the virtual zone makes Georgia an attractive direction for IT entrepreneurs striving for international development.