Georgia does not run one preferential tax rate. It runs six, and almost every guide to Georgian tax picks one of them and explains it well, without ever placing it next to the other five. That leaves the actual question unanswered: given your specific numbers, your activity and how long you have been operating, which of Small Business Status, Micro Business Status, Virtual Zone, International Company Status, the new innovation statuses or plain ordinary taxation is the one you should actually register under. Here is the full comparison, in one table, with a straight answer for an IT company at each stage of growth.
The six regimes, in one table
Before picking apart any single regime, it helps to see all of them at once, because the decision genuinely depends on comparing them against each other rather than checking any one in isolation.
| Regime | Rate | Ceiling or condition | Entity required | Who it suits |
|---|---|---|---|---|
| Micro Business Status | 0% | Under 30,000 GEL turnover, no employees | Individual, no IE required | A very small solo operation testing the water |
| Small Business Status | 1% (3% above cap) | Under 500,000 GEL turnover | Individual Entrepreneur | A solo service business with real turnover |
| Ordinary personal tax | 20% | No ceiling | Individual or IE | Income that fails every preferential test |
| Virtual Zone | 0% on qualifying IT income | No minimum trading history | LLC | An IT company exporting software, any age |
| International Company Status | 5% profit, 5% payroll, 0% dividend | 2 years' experience, local substance | LLC | An established IT or maritime company |
| Ordinary corporate tax | 15% on distribution | No ceiling | LLC | A company outside every preferential regime |
Each row is a genuinely different mechanic, not a variation on the same theme. Some tax turnover, some tax profit, one taxes payroll separately from profit, and one taxes nothing until money is actually distributed. Reading them as points on a single scale from cheap to expensive misses why a company would ever choose the higher-numbered option over a lower one - which the sections below work through one comparison at a time.
Small Business Status against Micro Business Status
These two are the individual-level regimes, and the choice between them is rarely close once turnover is real. Small Business Status taxes turnover at 1% up to 500,000 GEL and permits hiring. Micro Business Status taxes turnover at 0% but only below 30,000 GEL, with no employees permitted at all and a narrower list of qualifying activities.
The practical rule is simple: almost every business that earns enough to matter moves from Micro to Small Business Status within its first year, not the other way round. The 30,000 GEL ceiling is roughly $900 a month, and a single serious client crosses it quickly. The two statuses share the same legal foundation, Government Resolution No. 415, and the transition between them carries a strict 15-day window that our dedicated Micro Business Status guide covers in full.
Small Business Status against ordinary taxation
Outside any preferential status, Georgia taxes an Individual Entrepreneur at a flat 20% on business income, with expenses deductible. Small Business Status trades that deduction away for a much lower headline rate charged on gross turnover instead of profit.
The break-even point is a 5% net margin: at exactly that margin, 1% of turnover equals 20% of profit. Above it, which covers almost every solo software, design or consulting business, Small Business Status wins, often by an order of magnitude. Below it, typically a reseller or a business with heavy subcontracted costs, the ordinary 20% rate on profit can actually cost less. Our 1% tax guide works through this arithmetic in full, including the prohibited activities that rule the 1% out regardless of margin.
Virtual Zone against International Company Status: the comparison everyone conflates
This is the pair that causes the most confusion in the entire Georgian tax system, because both apply to IT companies, both beat the ordinary 15% corporate rate substantially, and neither is simply "the newer version" of the other. Virtual Zone is defined under the Law of Georgia on Information Technology Zones; International Company Status sits in a separate government ordinance.
Virtual Zone gives an LLC 0% corporate tax on IT products it created and exported, with no minimum trading history at all. International Company Status gives 5% on profit and 5% on payroll, with 0% on dividends, but only to a company with at least two years of genuine experience in the permitted activity and real local substance already in place. A brand-new company cannot qualify for International Company Status no matter how strong its product is, and an established company with broad service lines sometimes gets more value from International Company Status's wider activity definition than from Virtual Zone's lower headline rate.
| Virtual Zone | International Company Status | |
|---|---|---|
| Corporate tax | 0% on qualifying export IT income | 5% on profit |
| Dividend tax | Standard rules apply | 0% |
| Wage tax on staff | Standard 20% | 5% |
| Minimum experience | None | At least 2 years in the permitted activity |
| Substance requirement | Genuine IT production, increasingly scrutinised | Explicit: local staff, real costs, offices |
| Qualifying activities | Narrow: production of software products | Broader: development, hosting, maintenance, consulting, plus maritime services |
| Revenue mix requirement | Not specified in law | At least 98% from permitted activities |
The rate alone makes Virtual Zone look like the obvious winner, and for a new company it usually is, simply because International Company Status is not available yet. Our Virtual Zone guide covers the eligibility, the application process and the retrospective revocation risk that has become real as Revenue Service scrutiny of genuine Georgian substance has tightened. Where a company has cleared the two-year bar and runs a broader mix of services than Virtual Zone's narrow software-production definition covers, International Company Status's 5% on profit plus 0% dividends can be worth more than Virtual Zone's lower headline rate, particularly for a business planning to distribute rather than reinvest.
Ordinary corporate tax: the floor everything else is measured against
A plain Georgian LLC with no preferential status pays 15% corporate tax, but only when profit is actually distributed as a dividend, plus a further 5% dividend withholding on top, so roughly 20% all-in on money actually taken out. Profit kept inside the company is taxed at 0% until distribution, under the Estonian-style model Georgia adopted in 2017.
This is the baseline every preferential regime above improves on in a different way. Virtual Zone and International Company Status both beat it on rate for qualifying IT income. Small Business Status beats it for a solo operator below the turnover cap. What an ordinary LLC offers that none of the preferential statuses do is unlimited flexibility: any legal activity, any revenue mix, any client base, with no substance test to pass and no two-year waiting period. A company that does not cleanly qualify for any preferential regime, or one still working out whether it will, defaults here without losing access to the reinvestment deferral that makes Georgian corporate tax unusually favourable in the first place.
The new innovation statuses, and where they sit against everything above
Since amendments to the Law on Innovations took effect through 2025, Georgia has run a third track alongside the six regimes above, administered through GITA's Innovation Registry rather than the ordinary Revenue Service application. Three separate statuses sit under this framework, confirmed in coverage of the law's entry into force:
- Innovative Startup status, for a genuinely new company developing an innovative product or process, carrying meaningful income and profit tax relief that steps down over as long as ten years of renewal, tied to demonstrating real investment as the company matures.
- R&D Service Provider status, for a company providing research and development services, taxed on the same terms as International Company Status: 5% on profit and income.
- Innovative SME status, for an established company that spends at least 5% of the prior year's revenue on research and development, subject to a 100,000 GEL minimum, alongside a patent or registered software output.
This is genuinely new, in force from the second half of 2025, and the exact tiered schedule of relief has moved between how different professional summaries describe it even in the first year. Treat the general shape as reliable, that meaningful relief exists and tapers over time rather than staying flat, and confirm the specific rate that applies at your company's stage directly with GITA or a tax adviser before relying on a number from any single source, including this one.
The law explicitly rules out holding an innovation status alongside Virtual Zone or International Company status at the same time. For a genuinely innovative product company, that makes the innovation track a real fourth option worth evaluating against Virtual Zone specifically, rather than an addition on top of it, and the right choice depends on how the company's specific product and investment history line up against each framework's conditions.
Which status an IT company should pick, by scale
This is the question the rest of this comparison exists to answer, and the honest response changes at least three times between a first invoice and a real company.
Pre-revenue or under 30,000 GEL a year, solo, no hires. Micro Business Status, if the activity qualifies and there is no plan to hire soon. It costs nothing and the ceiling is high enough for genuine early testing.
A solo developer or small team, turnover growing past 30,000 GEL, under 500,000 GEL. Small Business Status. The 1% turnover rate beats almost every alternative for a high-margin solo or two-person operation, and it permits the hiring Micro Business Status does not.
An IT company with a real product, exporting to clients outside Georgia, no long trading history yet. Virtual Zone. It requires an LLC rather than an IE, so this is also the point where company structure genuinely changes, but the 0% rate on qualifying export income with no minimum history makes it the only realistic preferential option at this stage for a company past the Small Business Status ceiling.
An established IT company, at least two years in, broader service mix than pure software production, real local staff. International Company Status becomes available and is worth comparing properly against staying on Virtual Zone, particularly if the company plans to distribute profit rather than reinvest it, since International Company Status's 0% dividend treatment is where it pulls ahead.
A genuinely innovative product or R&D-heavy company at any of the stages above. The innovation statuses are worth a direct conversation before defaulting to Virtual Zone, precisely because the two cannot be held together and the innovation track's relief can be worth more in the early years for a company that qualifies.
Anything that fails every activity or substance test above. Ordinary LLC taxation at 15% on distribution, which still beats most Western corporate tax systems and keeps the reinvestment deferral, even without a preferential rate on top of it.
What none of these rates change
Whichever regime applies, several obligations sit outside all six and apply regardless of status. VAT registration is mandatory once turnover passes 100,000 GEL in any rolling 12 months, at 18%, a separate and much lower threshold than any of the regime ceilings above. Every registered business, IE or LLC, under any status, files a monthly declaration with the Revenue Service of Georgia by the 15th, including in months with no income at all. Registry fees are fixed regardless of which regime you end up choosing: an Individual Entrepreneur costs 26 GEL standard or 75 GEL for same-day processing, and an LLC costs 200 GEL standard or 400 GEL same-day, confirmed on NAPR's own fee schedule.
None of these preferential rates change your personal tax residency question either. Registering under any status here taxes the entity or the individual on Georgian-source income; it does nothing about whether you remain fully tax resident somewhere else with worldwide taxation. That is a separate question our Georgian tax residency guide and the country-specific pages in our moving to Georgia guide work through, and it needs answering regardless of which of the six rows above your business ends up in.
Bring us your activity, your revenue trajectory and how long the company has been trading, and we will map it against all six regimes honestly, including when the answer is to stay put on what you already have. Thirty minutes, no cost.
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If Small Business Status is the clear fit, individual entrepreneur registration covers what that actually involves. If an LLC and Virtual Zone are the better route, our dedicated guide to exceeding the 500,000 GEL threshold covers the point at which that conversion usually makes sense.
Key takeaways
- Georgia runs six live tax regimes at once: 0% Micro Business, 1% Small Business Status, 0% Virtual Zone, 5% International Company Status, 15% ordinary corporate tax, and 20% flat personal tax outside any status.
- Micro and Small Business Status are individual-level regimes; almost every growing business moves from the former to the latter within its first year.
- Virtual Zone requires no trading history and taxes qualifying export IT income at 0%. International Company Status requires two years of experience and real substance but offers 0% dividends, which can be worth more than the rate difference for an established company that distributes profit.
- A new innovation framework, Innovative Startup, R&D Service Provider and Innovative SME status, sits alongside these six and cannot be combined with Virtual Zone or International Company status.
- The right structure for an IT company changes with scale: Micro or Small Business Status early, Virtual Zone once an LLC and export income exist, International Company Status once two years and real substance are in place.
- VAT at 100,000 GEL, monthly filing, and fixed registry fees apply regardless of which regime you choose.
Frequently asked questions
What are all the tax regimes available in Georgia?
Six in total: Micro Business Status at 0% under 30,000 GEL turnover, Small Business Status at 1% under 500,000 GEL, Virtual Zone at 0% on qualifying exported IT income, International Company Status at 5% profit and payroll with 0% dividends, ordinary corporate tax at 15% on LLC distributions, and ordinary personal tax at a flat 20%. A separate innovation framework introduced in 2025 sits alongside these.
Should I choose Small Business Status or Virtual Zone?
It depends on your legal form and your client base. Small Business Status is for an Individual Entrepreneur with turnover under 500,000 GEL. Virtual Zone requires an LLC and applies specifically to IT products exported to clients outside Georgia. A solo developer below the turnover cap usually starts with Small Business Status; an IT company with a product to export usually needs the LLC structure Virtual Zone requires.
What is the difference between Virtual Zone and International Company Status?
Virtual Zone gives 0% corporate tax on qualifying exported IT income with no minimum trading history. International Company Status gives 5% on profit and payroll with 0% dividends, but requires at least two years of documented experience and genuine local substance. A brand-new company can only qualify for Virtual Zone; an established one with a broader service mix often finds International Company Status worth more once it clears the two-year bar.
Can I hold both Virtual Zone and International Company status at once?
No. They are separate regimes with separate applications, and a company generally holds one or the other rather than stacking them, since both apply to overlapping categories of activity. Which one to choose depends on your trading history and whether you plan to distribute or reinvest profit.
What are the new innovation statuses in Georgia?
Three statuses introduced through 2025 amendments to the Law on Innovations: Innovative Startup status, carrying multi-year income and profit tax relief for a genuinely new innovative company; R&D Service Provider status, taxed the same as International Company Status at 5%; and Innovative SME status, for an established company meeting a research and development spending threshold. None can be combined with Virtual Zone or International Company status.
Which regime is cheapest for a solo freelancer?
Small Business Status, for almost anyone above a 5% net margin, since 1% of turnover beats 20% of profit at any wider margin than that. Below 30,000 GEL of turnover with no employees, Micro Business Status is cheaper still, at 0%, though the ceiling is low enough that most growing freelancers pass through it quickly.
At what point should an IT company move from Small Business Status to Virtual Zone?
Once turnover approaches the 500,000 GEL Small Business Status ceiling, or once the business needs an LLC's liability separation, multiple owners, or the ability to hire meaningfully. Virtual Zone requires an LLC, so the move happens alongside a structural change, not as a simple status swap on the same registration.
Does an ordinary LLC ever beat all the preferential regimes?
Sometimes, for a business that does not cleanly qualify for any of the preferential statuses, whether because of its activity, its client mix, or its trading history. An ordinary LLC still gets Georgia's reinvestment deferral, 0% on profit kept in the company, which is a real structural advantage even without a preferential rate layered on top.
How much does it cost to register under each of these regimes?
Registry fees do not vary by regime: 26 GEL standard or 75 GEL same-day for an Individual Entrepreneur, and 200 GEL standard or 400 GEL same-day for an LLC. What varies is the professional cost of the specific application, since Virtual Zone, International Company Status and the innovation statuses each carry their own eligibility review before the underlying entity registration is even relevant.
Do all six regimes require monthly filing?
Yes. Every Individual Entrepreneur and every LLC files a monthly declaration with the Revenue Service by the 15th, including months with no income, regardless of which regime applies. The specific content of the filing differs by status, but the obligation to file at all does not.
Which status should a company choose if it plans to distribute most of its profit rather than reinvest?
This is where the dividend treatment matters more than the headline rate. International Company Status's 0% dividend tax can beat Virtual Zone's lower corporate rate once a company plans to draw most of its profit out rather than keep it in the business, which is worth modelling against your actual numbers rather than assuming the lowest corporate rate automatically wins.