The Virtual Zone Persons contributed more than 66 million to the budget only in 2021

According to the official data of the Revenue Service of the Ministry of Finance, companies with the status of Virtual Zone Persons paid 66.2 million GEL to the Georgian budget only in 2021 in the form of various taxes.

Among them, according to the information from the Revenue Service, the Virtual Zone Persons paid 33,142,127 GEL in the form of VAT and 235,988 GEL in the form of property tax (including agricultural/non-agricultural land).

During the analysis period, the import tax on Virtual Zone Persons amounted to 15,786 GEL, the profit tax was 8.3 million GEL, and the income tax exceeded 24.5 million GEL.

According to the most recent data, approximately 1100 IT companies in Georgia have been granted the status of Virtual Zone Persons, and their tax contribution to the Georgian economy appears to be substantial.

Strengthening local IT companies, and attracting Virtual Zone Persons and international IT companies with tax incentives to Georgia was one of the important steps in the direction of increasing the country’s economy, employment market, and the qualification and remuneration of employees.

The Association of Georgian Virtual Zone Persons claims that thanks to the tax incentives in this field, hundreds of Georgian IT specialists, without leaving the country, receive the same remuneration as their colleagues in developed Western countries. The Association also says that the young generation is well aware that the future is in technology, and they believe that the IT market should not appeal only to writing codes and that it is necessary to promote other IT directions as well. For all of this, it is critical to improve legislation and popularize the field so that global companies do not relocate their operations to other countries. Especially since today Georgia has many competing countries in the world that are trying to attract international IT companies to their markets with tax incentives.

However, due to the ambiguity of tax legislation, this industry has already encountered some difficulties in recent years. This became the basis for the interpretation of the tax authorities, and the companies were fined millions of GEL as a result. The aforementioned circumstances had a significant impact on these companies’ motivation, and these processes also caused significant reputational damage to the country. The Association of Georgian Virtual Zone Persons, on the other hand, has been actively communicating with the government in order to resolve recent issues.

The Association notes that there have been some changes in this direction, and it is hopeful that the Ministry of Finance will take action. Members of the Association, in particular, work to bring the positions of business and the state closer together, to promote the attractiveness of the industry, to improve legislation, and to address other important issues.

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