Zero Tax Regime for Startups to Launch on September 24 – GITA

A zero tax regime for startups will officially come into effect on September 24, 2025, according to the Georgian Innovation and Technology Agency (GITA). The initiative, in development since 2024, is based on an analysis of international best practices, the needs of Georgia’s startup ecosystem, and global trends.

As GITA told Business Partner, the agency drafted amendments to the Law of Georgia on Innovations, which were initiated by the Georgian Government in spring 2025 and adopted by Parliament on June 24.

The reform introduces three distinct tax statuses:

• Innovative Startup Status

• Innovative Small and Medium-Sized Company Status

• R&D Service Provider Status

According to GITA, support mechanisms for startups are aligned with three developmental stages:

• Years 1–3: Startups will enjoy a zero income tax rate on salaries.

• Years 4–6: Income and profit tax rates will be reduced to 5%.

• Years 7–10: These rates will increase to 10%.

To be eligible for startup status, applicants must meet requirements set by the Law on Innovations. There is no cap on the number of eligible startups, and any entity that meets the criteria may apply.

After GITA evaluates the applications, they are submitted to the Ministry of Economy and Sustainable Development, and then to the Government of Georgia, which officially grants the status.

Eligibility Criteria for Innovative Startup Status:

• Must create an innovative product, process, or service.

• Must have received at least 100,000 GEL in investment from an accredited fund, angel investor network, or accelerator within the past two years, or 150,000 GEL in grant funding.

• Revenue and expenses must be directly linked to the innovative activity.

• Must have no tax arrears, not be listed in the debtors’ register, not be undergoing insolvency or liquidation proceedings.

The status is valid for one year and is renewable annually for up to 10 years, provided the company continues to meet evolving requirements. These include higher investment thresholds over time—5 million GEL by year 4, and 15 million GEL by year 7—with at least 30% from institutional investors or accelerators.

GITA also confirmed that the definition of a startup is clearly outlined in the Law on Innovations, and that the new benefits will apply to companies that meet the law’s criteria for innovative startups.