Are Virtual Zone Person (VZP) and International company statuses expected to merge?

The Association of Georgian Virtual Zone Persons has consistently act in the interests of VZP companies and initiated legislative changes, which were discussed with Parliament’s committee and senior Ministry of Finance officials. These changes were approved and acknowledged as necessary by the authorities. 

However, VZP-status companies still struggle with fines due to unclear legislation.

In addition, there are doubts that there are real chances that the governing bodies would consider combining the virtual zone person (VZP) and International company statuses in Georgia into one category, as there is considerable overlap in their legislation.

The merger of the statuses would have implications for both startups and experienced companies. International status requires at least two years of experience to qualify for tax credits, which hinders startups from benefiting from these credits. On the other hand, VZP status does not have this requirement, attracting novice programmers and businesses to choose Georgia as their location. However, the main challenge for VZPs remains the specification of tax legislation, as a new law or merger alone will not address the problems they face.

According to statistics, there is a higher and growing interest in the Virtual Zone Person status compared to the international company status. The number of granted VZP statuses is significantly higher, and it would be interesting to compare the taxes paid by companies with both statuses to the Georgian budget to draw accurate conclusions.

Overall, the need for further analysis, collaboration, and improvement in tax legislation to ensure the success and profitability of both businesses and the state in merging the statuses of VZP and international companies should be highlighted.

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