International Company status cuts payroll tax from 20% to 5%
The state investment agency's own tax page sets out the terms: 5% profit tax, nothing on dividends, and 5% personal income tax on salaries instead of the standard 20%. The qualifying test is the part that decides whether any of it applies to you. At least 98% of annual revenue must come from permitted IT activities, at application and continuously after it, and the applicant must be a Georgian enterprise that has already traded in those sectors for more than two years. A company registered last month does not qualify, whatever its line of work.
Three rates, and what they replace
The status carries a 5% profit tax, 0% on dividends paid out, and 5% personal income tax on salaries. Outside the regime, salaries are taxed at 20%, and company profit is taxed only when it is distributed, at 15%. The payroll line is where the saving is largest for a service business whose main cost is people: the gap between 20% and 5% on every salary is the whole argument for applying, far more than the headline profit rate.
The 98% test does not stop at approval
The agency's wording is that at least 98% of annual revenue has to come from the permitted IT activities both when you apply and on an ongoing basis. That makes it a condition you keep meeting rather than a box you tick once. A firm that diversifies — consulting on the side, reselling hardware, letting a floor of its office — can drift past the 2% margin without noticing, and the status is what is at risk. Anyone relying on these rates should be watching the revenue mix monthly rather than at year end.
Two years of trading comes first
The second condition rules out the obvious shortcut. The applicant has to be a Georgian enterprise that has operated for more than two years in the relevant sectors, so a company set up in order to hold the status cannot have it from day one. In practice the first two years are taxed normally, and the real planning question is whether the business will still be the same shape — same activities, same revenue mix — by the time it becomes eligible.
What it is not
It is not a residency route, and it is not a blanket discount on doing business in Georgia. VAT still applies at 18% once turnover crosses the registration threshold, property tax remains a local tax capped at 1%, and the status covers only the listed activities. Read against the alternatives — Small Business Status for small turnover, a free industrial zone for goods made for export — it is a narrow regime built for established software and IT services firms, and the wrong tool for most other businesses.
Written by us from the source linked above, not investment, legal or tax advice. Figures and rules change — confirm anything that matters before acting on it.
