New Methodical Instruction for Acquiring and Maintaining Virtual Zone Status in Georgia
On December 29, 2022, the Revenue Service of Georgia introduced a new Methodical Instruction that outlines the requirements for acquiring and maintaining the Virtual Zone status. This move aims to enhance the business environment and attract more companies to operate within the Virtual Zone in Georgia. In this article, we will explore the key aspects of the new Methodical Instruction and its implications for businesses seeking Virtual Zone status.
Definition of Virtual Zone:
The Virtual Zone refers to a designated area in Georgia where specific IT companies can operate with certain tax benefits and incentives. The Virtual Zone status allows companies to enjoy exemptions from corporate income tax (CIT) and other associated advantages.
Key Highlights of the Methodical Instruction:
1. Eligibility Criteria:
- The Methodical Instruction defines the eligibility criteria for companies seeking Virtual Zone status. Companies must meet specific requirements outlined by the Revenue Service of Georgia.
- The Virtual Zone status is exclusively granted to IT companies operating in designated sectors, such as software development, information technology services, research and development, and related fields.
2. Application Process:
- The Methodical Instruction provides detailed guidelines for the application process to acquire Virtual Zone status.
- Companies interested in obtaining the Virtual Zone status must submit a comprehensive application, including relevant documentation and supporting evidence of their eligibility.
3. Tax Benefits and Incentives:
- Once granted Virtual Zone status, companies will be exempt from corporate income tax (CIT) for their activities within the Virtual Zone.
- Virtual Zone companies can also enjoy other advantages, such as simplified tax reporting procedures and reduced administrative burdens.
4. Compliance Requirements:
- The Methodical Instruction emphasizes the importance of compliance with tax and regulatory obligations.
- Virtual Zone companies are required to adhere to the applicable laws and regulations of Georgia, including timely submission of tax returns and financial statements.
5. Monitoring and Auditing:
- The Revenue Service of Georgia reserves the right to monitor and audit Virtual Zone companies to ensure compliance with the terms and conditions of the Virtual Zone status.
- Regular checks may be conducted to verify the accuracy of financial records and verify compliance with tax regulations.
The introduction of the new Methodical Instruction by the Revenue Service of Georgia underscores the government's commitment to fostering a favourable environment for IT companies within the Virtual Zone. By offering tax incentives and streamlined procedures, Georgia aims to attract more businesses to establish their operations in the Virtual Zone. Companies interested in acquiring and maintaining Virtual Zone status should carefully review the Methodical Instruction and fulfill the specified requirements to take advantage of the benefits associated with operating within the Virtual Zone in Georgia.