Georgia, over the years, has become an investment friendly destination thanks to a plethora of benefits it offers. These include a strategic location, low-cost skilled labour at the reach of a hand, a productive infrastructure, vibrant institutions, and a low tax regime among others. In fact, the open market economy pursued by Georgia has helped businesses to make a beeline to the country including the Fortune 500 ones. The country provides special zones for businesses where the latter get scores of benefits to compete with the rest of the world. A virtual zone in Georgia happens to be one such special zone dedicated exclusively to the IT industry.
What is a virtual zone in Georgia?
The Finance Ministry of Georgia defines virtual zones as an area where, “process of research, development, support, design, production and implementation of computer and information system” is done. Thus, a virtual zone in Georgia is actually a place specially made for the Information Technology sector and facilitates the development of software products and services.
What makes for a virtual zone person?
“A company is treated as a separate entity or a person.” (Source: US Legal) Similarly, a virtual zone person is actually the IT company registered in a virtual zone in Georgia. To be eligible, it must be from the IT sector.
As a virtual zone person, you become the recipient of plenty of benefits. Georgia provides the technology and infrastructure that are needed for any IT company to begin operations. Also, since Georgia is home to many skilled IT workers who are willing to slog it out, the IT companies do not need to hire talent from outside. No wonder, the virtual zone has become an attraction to businesses that want to leverage the myriad opportunities.
What are the benefits you derive from a virtual zone?
Among the many reasons that businesses find attractive at the virtual zone in Georgia, let us discuss the top ones.
- The dividends from the company distributed to a resident shareholder are tax-free.
- If the income as a virtual zone person is not distributed, there will be no taxation in Georgia.
- Export duties or taxes on products exported from the customs territory of Georgia are excused from tax.
- If the company set up at the virtual zone extends its services to foreign customers outside Georgia, the income is exempted from VAT (18%) and income tax (15%).
- There will be a 5% tax if the company’s income is distributed to a non-resident of Georgia.
- Virtual Zone persons are exempted from local government regulations, licenses and permits.
- When a company distributes a dividend to any foreign shareholder, the tax is charged on the basis of two parameters. One, the rules that apply at the shareholder’s place of residence. Two, the double taxation agreement that exists between Georgia and that country.
Conclusion: The virtual zones have become a hub for young entrepreneurs who are setting up IT startups and want an enabling environment to compete. You can check out a Georgia based financial adviser, KauKapital by checking its website https://kaukapital.com/services/virtual-zone/ to know more about the virtual zone in Georgia.