Door to the world of benefits: How to get the status of a Virtual Zone Person in Georgia
Today Georgia is becoming an attractive point of interest for foreign IT investors. They are increasingly turning their eyes to this country, seeing it not only as a promising destination for investment but also as a favorable platform for the successful functioning of their projects. At the center of this interest is the status of the Virtual Zone Person. Let’s figure out together what privileges this status offers and what conditions must be met to obtain it.
Privileges of the Virtual Zone Person status
This status was introduced in 2011 to stimulate the growth of the IT sector in Georgia. Based distributionon this status, companies can enjoy dividendsthe following privileges:
Tax benefits:
0% profit tax (instead of 15%) on the of , subject to the provisions of the relevant country’s Double Taxation Avoidance Treaty with Georgia (if any).
0% VAT tax (instead of 18%).
Ease of registration:
No Georgian residency is required.
No tax residency is required.
No separate license is required for IT activities.
Getting the status is free.
It is important to understand that the exemption from taxes applies only to profits derived from IT services and if the company provides services to foreign clients outside Georgia.
Requirements for obtaining Virtual Zone Person Status in Georgia
Virtual zone status is granted to specific IT companies that meet certain criteria.
Type of activity:
Obtaining virtual zone status must in compliance with Resolution 49, which specifies the criteria for companies wishing to obtain it. Your type of activity must be related to creating and maintaining software, managing software, and computer hardware, and providing software/hardware support in accordance with Order No. 33544.
It is important to pay attention to the fact that there are nuances regarding the concept of software. Thus, the Georgian legislation does not define the definition of a software product or the rules related to its creation. At the same time, the Law of Georgia “On Copyright and Related Rights” recognizes the definition of a computer program. In particular, a “computer program” is a set of instructions expressed in words, codes, chips or in any other machine-readable form, which enables a computer to achieve certain results. The term also includes preparatory material for a computer program design; The term includes preparatory materials for developing a computer program. As with “computer program,” software generally refers to a program or set of programs that contain instructions necessary for the operation of the computer itself or instructions for performing other tasks. Software is independent of the hardware (computer devices), and it is the software that can be used to program computers. To comply with the activities within the status, the company’s activities must involve the kind of computer information systems activities that are used in the creation or development of software.
Therefore, if your company meets these criteria, hurry up and apply for the status!
Company registration:
For VZP status, a company’s legal presence in Georgia is required, meaning that the legal entity must be registered with the National Agency of Public Registry. The registered company is expected to conduct economic operations within Georgia and hire IT professionals to work outside the country. In addition, the products must be sold outside of Georgia.
The process of becoming a Virtual Zone Person: steps to registration
If your company meets the above criteria, you can begin the process of becoming a company with virtual zone status.
Step 1: Preparation of documents
Download and fill out the application form on the official website of the Financial-Analytical Service (www.fas.ge).
Provide a list of information technology projects, if any, from the past three years, including agreements with clients or other relevant documentation confirming that you provide information technology products and services to others.
Step 2: Submission of an application
Submit your completed application electronically to the Financial-Analytical Service.
Virtual Zone person status is granted no later than 10 business days after the application for status is submitted
Step 3: Consideration of an application
Wait for the application to be reviewed. Virtual zone person status is being considered during 10 business days after the application is submitted (unless additional information is required).
Step 4: Obtaining a certificate
Once your company has been granted Virtual Zone Person status, you will receive an electronic certificate confirming this status. This occurs no later than 2 business days after the decision is made.
The Virtual Zone Person status is issued for an indefinite period.
Compliance with the above steps will help your company obtain Virtual Zone Person status in Georgia and take advantage of tax benefits and simplified administrative procedures.