Obtaining International Company Status in Georgia: Since the early 2000s, the Republic of Georgia has successfully bolstered its global reputation and attracted foreign investments by implementing favourable tax policies and fostering a conducive business environment. This has resulted in Georgia becoming a highly sought-after destination for foreign entrepreneurs. In addition to its advantageous tax framework, Georgia presents a plethora of opportunities for global IT and maritime enterprises aiming to optimize their operational and corporate costs. The case in point is the preferential taxation scheme – International Company Status (ICS). This article aims to discuss all nuances of acquiring ICS in Georgia and the ways to preserve it for the long term.

In 2020, the Georgian Government introduced a new tax incentive for companies operating in the IT and maritime sectors through Ordinance №619  which outlines the criteria and list of permitted activities under the preferential taxation scheme. ICS  companies in Georgia are subject to flat tax rates that are significantly lower than corporate tax rates in many other countries.

By acquiring the special  ICS  in Georgia, enterprises can avail of guaranteed tax benefits, which is considered the primary advantage of relocating their operational business structure to Georgia.  

Tax Benefits – “Obtaining International Company Status in Georgia”

In recent years, Georgia has become one of the most attractive places to register as an individual entrepreneur. This is due to a number of advantages that the state provides to its entrepreneurs. In this article, we will look at five main reasons why it is worth registering as an individual entrepreneur in Georgia.

The tax rates for LLC and LLC with ICS in Georgia are outlined in the timetable below. The occurrence of Corporate Income Tax in Georgia is governed by the Estonian Model of taxation, which was adopted in 2017. This model stipulates that a legal entity is liable for corporate income tax only after distributing pure profit among shareholders in the form of dividends. Consequently, if the gained profit is reinvested for the company’s further development purposes, CIP is not applicable.

LLC versus ICS

tax rate table

The tax regime for ICS  in Georgia is a noteworthy aspect of the country’s legal framework, but it is not the sole advantage that Georgian legislation offers. The process of establishing a company in Georgia is transparent and uncomplicated, with the Law of Entrepreneurs guaranteeing equal rights to both domestic and foreign investors. The registration process can be completed within one working day, with expedited services available for same-day registration, excluding the time required for drafting the company charter. The legal provisions allow the company director to act as the sole representative of the company’s interests before both governmental and non-governmental institutions. This unique rule enables company shareholders to complete the entire registration process remotely, without the need to visit Georgia, in the presence of the director.

How to Qualify for ICS?

The initial step in acquiring the ICS involves a verification process to ensure that the business activities align with the authorized activities outlined in Annex 2, Article 1 of Ordinance №619. Eligibility for ICS requires a Georgian enterprise to have a minimum of two years of experience in the relevant activity or represent a non-resident enterprise with two years of experience in permitted activities. A foreign company seeking ICS must establish its representation through regulatory procedures in the National Agency of the Public Registry of Georgia and meet specific requirements, such as identifying all initial beneficiaries of the foreign company and providing the complete set of founding documents for the founder foreign legal entity.

Furthermore, establishing a tangible presence in the country is imperative for qualifying for ICS, which entails possessing the necessary resources, particularly human resources and qualifications, to carry out income-generating activities in Georgia and covering all associated costs, as stipulated in Annex 1, Article 2 of Ordinance №619.

The application for acquiring ICS is initially submitted to the Revenue Services of Georgia, which must assess the application within 10 working days, assuming no additional information is requested by the RS case officer. Subsequently, the application is submitted to the Ministry of Finance of Georgia; however, the timing for this process is unspecified, and the final decision is made by the government of Georgia. Given that the application undergoes review by three governmental institutions, it is challenging to provide an exact timeline or specific dates for the process.

Maintaining the ICS

The acquisition of ICS is a formidable undertaking, however, the task of maintaining this status can prove to be even more challenging. The status may be revoked if the holder fails to adhere to the established regulations or voluntarily relinquishes their status. Should the ICS holder derive their income from activities that are deemed unlawful, the Ministry of Finance reserves the right to review the case within a period of ten working days, and by the ordinance of the Government of Georgia, revoke the ICS. The grounds for revocation of status are expounded upon in Ordinance №619, Article 3.

If you need help determining if your company is eligible for ICS, applying for ICS, or learning more about it, please feel free to fill out our free evaluation case form or contact us directly.