Tax Incentives in Tbilisi in 2024

Key Business Tax Incentives in Tbilisi

1. Exemption from Tax on Reinvested Profits
   Since 2017, Georgia has implemented a tax reform allowing companies to be exempt from paying profit tax if they reinvest their earnings back into the business. This rule also applies to foreign companies, making Tbilisi an appealing location for international business expansion.

2. Free Industrial Zones (FIZs)
   Tbilisi and other regions of Georgia have established Free Industrial Zones, which offer substantial tax advantages. Companies registered in these zones are exempt from VAT, profit tax, and import tax. These zones are aimed at manufacturing and export-oriented businesses, and in 2024, these favorable terms remain in place, positioning Tbilisi as an ideal base for export-focused enterprises.

3. Small Business Incentives
   In 2024, the tax rate for small businesses in Tbilisi (and throughout Georgia) is only 1% if the annual turnover does not exceed GEL 500,000. This significantly reduces the tax burden on startups and promotes the growth of small and medium-sized enterprises.

4. Microbusiness Benefits
   Tbilisi also offers benefits for microbusinesses. Entrepreneurs with an annual income below GEL 30,000 are exempt from income tax. This measure supports self-employed individuals and freelancers, who make up a significant portion of the local labor market.

5. Reduced Tax Rate for Individual Entrepreneurs
   Entrepreneurs working without establishing a legal entity and with an income of up to GEL 500,000 benefit from a 1% income tax rate, creating a very favorable business environment for such individual entrepreneurs.

6. Special Tax Conditions for IT Companies and Startups
   In 2024, the Georgian government continues to support the development of the IT industry and startups. Tbilisi has a program that allows certified IT companies to pay reduced taxes on income, making the city attractive for tech startups.

Support Programs for Foreign Investors

1. Investor Visa
   Foreign entrepreneurs and investors looking to start a business in Tbilisi can obtain an investor visa, which grants them the right to reside in the country permanently. In 2024, the government continues to streamline the process of obtaining this visa, making it more accessible and convenient for investors.

2. Grants and Subsidies for Startups
   The Georgian Innovation and Technology Agency offers various grants and subsidies for startups and new companies. These programs help cover initial development costs and support innovation in various industries.

3. Double Taxation Agreements
   Georgia has signed double taxation agreements with over 50 countries. These agreements allow foreign investors to avoid double taxation when doing business in both Georgia and their home country, making Tbilisi’s tax system more attractive for foreign businesses.

Tax Benefits for Citizens and Taxpayers

1. Income Tax Reduction for Pensioners
   Georgia offers tax benefits for pensioners who are exempt from paying income tax on their pensions. This measure helps improve the standard of living for elderly residents, especially in major cities like Tbilisi.

2. Tax Deductions for Families with Children
   In 2024, families with minor children can receive tax deductions for educational and medical expenses. These deductions help reduce the tax burden on families, making life in Tbilisi more affordable.

3. Social Programs and Benefits for Low-Income Residents
   Tbilisi authorities actively support social programs for low-income residents, including subsidies for utilities and allowances. These benefits improve living conditions for low-income households.

Tax Benefits for the Tourism Sector

1. VAT Exemption for Hotels and Tourist Facilities
   In 2024, hotels and other tourism-oriented facilities are exempt from VAT. This helps reduce the cost of tourist services and increases the flow of visitors, positively impacting the city's economy.

2. Support for Gastronomy and Cultural Tourism
   Businesses engaged in gastronomy and cultural tourism also enjoy benefits, such as tax deductions on equipment and materials used in service provision. Tbilisi is increasingly becoming a sought-after tourist destination, and tax incentives play a significant role in this process.

New Tax Initiatives for 2024

In 2024, the Georgian and Tbilisi governments introduced several new initiatives to further improve the investment environment and support entrepreneurship:

• Green Tax Regime for Eco-friendly Businesses: companies engaged in waste recycling and the production of eco-friendly goods receive additional tax incentives and deductions.

• Support for Export-oriented Enterprises: companies with a focus on exporting receive additional tax incentives, including exemptions from certain customs duties.

• Digitization of the Tax System: In 2024, Georgia is implementing an enhanced electronic reporting system, making the tax payment process simpler and more accessible. This is particularly beneficial for international companies operating in Tbilisi.

Conclusion

In 2024, Tbilisi remains one of the most attractive cities for business operations in the post-Soviet space and beyond. A flexible tax system, benefits for small businesses, support for export-oriented and IT companies, and programs for foreign investors all contribute to a favorable business environment in the city. The tax incentives allow entrepreneurs to efficiently grow their businesses, reinvest profits, and contribute to the economic development of both Tbilisi and Georgia as a whole.

As a result, Tbilisi is not only a cultural and tourist hub but also a business hub capable of competing with other capitals in terms of ease of doing business and quality of services.