Banks easily refuse to open accounts to foreign companies – Shorena Kopaleishvili
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How much do developers earn and what is happening in the Georgian IT industry?
June 4, 2024
The growth of tax payments by Virtual Zone Person (VZP) companies from 2011 including the first quarter of 2024 has been nothing short of remarkable. Analyzing the data reveals a dynamic statistic about these companies’ contributions to the national budget, underscoring their increasingly pivotal role in the economy.
Dramatic Growth in Tax Contributions
In 2011, VZP companies contributed 2,224,492.00 GEL to the state budget. By 2023, this figure surged to an impressive 88,714,787.00 GEL. This growth represents an increase of approximately 4000% in just over a decade. Such a substantial rise highlights the success of the virtual zone policy and the flourishing of the information technology business under its framework.
It is especially important to highlight the indicators of income tax, which are a direct indicator of employment in the VZP sector. In 2011, the income tax amounted to 1,105,580.00 GEL, and by 2023 it had grown to 37,664,597.00 GEL. This increase underscores the significant growth in employment within the Virtual Zone sector and the important role these companies play in job creation and in the employment of local specialists.
The continuous year-on-year growth indicates that VZP companies have not only expanded in number but also in their economic impact. Their contributions cover a wide range of taxes, including profit tax, income tax, import duties, and property tax, reflecting their diverse and comprehensive economic activities.
Quarterly Trends of 2024
Focusing on the first quarter of 2024, VZP companies have maintained their robust growth trajectory. This consistent performance reinforces the stability and resilience of VZP companies amidst varying economic conditions.
See the graphics:
Conclusion
The impressive contributions of VZP companies highlight their critical role in the economy of Georgia. The potential of these companies is well-positioned to drive future growth. Policymakers should continue to support and nurture this sector, ensuring that regulatory frameworks remain conducive to innovation and expansion. This sector’s performance will be a key indicator of economic health and a significant driver of future development.