Georgia’s 5% Corporate Tax Rate: Myth or Reality? (2025 Guide)

Georgia has built a reputation in recent years as a business-friendly and low-tax country, often mentioned in the same category as Estonia, Cyprus, and the UAE. One of the most attractive features discussed online is the "5% corporate tax rate". But how real is this number?

Is Georgia truly a low tax jurisdiction — or is this just a marketing myth?

In this guide, we explain the reality behind Georgia’s tax structure, including when the 5% tax applies, what conditions must be met, and how classic LLCs are taxed when International Company Status does not apply. Special focus is given to businesses operating in Tbilisi, Georgia’s business and tech hub.

Understanding the Estonian Model in Georgia

Georgia adopted the Estonian corporate tax model in 2017. Under this system, companies are not taxed on profit when it is earned — but rather only when it is distributed. This is a major departure from traditional tax systems.

Key Principles:

• 0% tax on retained and reinvested profits
• Corporate income tax applies only on distributed profit
• Standard rate: 15%
• Special rate: 5% (if company qualifies for International Company Status)

This system allows companies to grow more freely and reinvest in operations without losing money to immediate tax obligations.

 

Corporate Tax Rates: 15% vs 5%

1. Classic Georgian LLC (Standard Structure)

• Taxed at 15% on distributed profit
• No tax on reinvested profits
• No requirement to distribute profits annually
• No tax on operational reinvestment or hiring

This model applies to most companies in Tbilisi and other regions of Georgia.

2. LLC with International Company Status (ICS)

• Taxed at 5% on distributed profit
• No tax on reinvested profits
• No dividend withholding tax (for foreign shareholders)
• Reduced personal income tax for foreign staff

This status is reserved for companies in IT and maritime industries and must be granted by the Ministry of Finance in Georgia.

 

Is Georgia a Low Tax Jurisdiction?

Yes — for both classic LLCs and ICS-qualified companies.

Even without the 5% rate, Georgia offers:

• 0% tax on undistributed profits
• No capital gains tax
• No wealth tax
• Optional VAT registration (mandatory only above 100,000 GEL annual turnover)
• In many cases, no dividend tax for non-residents

This makes Georgia, and especially Tbilisi, a competitive choice for entrepreneurs and SMEs looking for transparency and simplicity.

 

Real-World Example

Let’s say a company earns €300,000 in net annual profit:

Action	Classic LLC (15%)	ICS Company (5%)
Profit reinvested	€0 tax	€0 tax
Profit distributed	€45,000 tax	€15,000 tax
Withholding on dividends	5% (possibly)	0% (non-residents)

 

Annual Filing and Compliance in Georgia

Georgia simplifies corporate compliance:

• No corporate tax filing unless profit is distributed
• Monthly VAT reports (if VAT-registered)
• Monthly payroll tax returns (if employing staff)
• Annual audit only required for large or regulated entities

 

Comparison with Other Tax-Friendly Countries

Country	Reinvested Profit Tax	Distributed Profit Tax	Dividend Withholding	Compliance Burden
Georgia	0%	15% (or 5%)	0–5%	Low
Estonia	0%	20%	0%	Moderate
Cyprus	12.5%	0%	0%	Moderate
UAE	0–9%	0%	0%	High

 

Conclusion: 5% Tax Rate — Real and Achievable, But Conditional

The 5% corporate tax rate in Georgia is real, but only applies to companies with International Company Status. For regular LLCs, the standard 15% rate applies — still one of the lowest in Europe and Eurasia.

Both types of companies benefit from the cornerstone of Georgia’s tax system: no tax on reinvested profit. This alone places Georgia among the most founder-friendly countries for tax optimization — particularly for tech and service companies in Tbilisi.