💼 Corporate Tax Rate in Georgia

Corporate Tax in Georgia

The Corporate Tax Rate indicator reflects the nominal tax burden on company profits. Georgia scores 62 out of 100, with a nominal rate of 15% – but this only applies to distributed profits. Under Georgia's Estonian-model CIT system, retained profits are taxed at 0%.

The Estonian CIT Model: How Georgia's System Works

In 2017, Georgia fundamentally reformed its corporate income tax by adopting the Estonian distributed profit model. The core principle is simple:

• Retained profits (reinvestment): 0% corporate tax – profits left in the company and reinvested are never taxed
• Distributed profits (dividends): 15% corporate distribution tax – only triggered when profits are actually paid out

This means a company earning GEL 1,000,000 that reinvests everything pays zero corporate tax. The 15% applies only at the moment of distribution. On the shareholder side, an additional 5% personal dividend withholding tax applies, bringing the combined tax-on-distribution to approximately 19.25%.

Why the Score is 62 – Not Higher

The raw value underlying this indicator is the nominal 15% distribution tax rate. While the effective rate for reinvesting companies is 0%, the World Bank/Heritage scoring benchmarks are based on the nominal statutory rate. Countries with 0% statutory rates (like the UAE) therefore score higher. Georgia's 15% nominal rate places it in the good-but-not-exceptional range by that measure – even though in practice, the deferred-taxation model is far more favorable than most countries with lower nominal rates that tax all annual profits.

Virtual Zone: 0% for IT Exporters

Georgian IT companies that qualify for Virtual Zone Person (VZP) status pay:

• 0% corporate tax on revenues from IT services delivered to clients outside Georgia
• 0% VAT on those export services
• 5% personal dividend withholding tax when profits are distributed to owners

VZP status is available to companies where the core business activity is qualifying IT services. The application is filed with the Revenue Service of Georgia and typically approved within 1–2 weeks. For an IT founder who retains profits, the effective combined tax rate is 0% until distribution.

Free Industrial Zones

Companies registered and operating within Georgia's Free Industrial Zones (FIZ) – located in Tbilisi and Poti – benefit from:

• Full corporate tax exemption on FIZ-derived income
• VAT exemption on transactions within and from the FIZ
• Customs duty exemptions on imported materials and equipment

FIZ status is suited for manufacturing, logistics, and certain trade operations with international scope.

Practical Tax Burden for Common Scenarios

• Startup reinvesting all profits: 0% corporate tax annually
• IT exporter (VZP) distributing profits: 5% total (personal dividend tax only)
• Standard LLC distributing profits: ~19.25% (15% CIT + 5% dividend tax on net)
• FIZ company: 0% on FIZ activities

Conclusion: Georgia's corporate tax score of 62/100 reflects the nominal 15% distribution tax. In practice, the deferred-taxation model makes Georgia exceptionally competitive for reinvesting businesses: the effective annual tax burden on retained profits is zero, and IT exporters with VZP status face a combined rate of just 5% on distributions.

This article was created on April 14, 2026