New Tax Incentives for Innovative Startups and R&D in Georgia

Effective September 24, significant amendments to the Tax Code of Georgia have introduced a series of tax exemptions and reduced rates. These incentives are specifically designed to foster growth for innovative startups, small and medium-sized enterprises (SMEs), and companies focused on Research and Development (R&D).

🔹 Innovative Startups:

Innovative startups can benefit from a tiered tax structure spanning 10 years:

• Years 1–3: 100% exemption from Personal Income Tax on employee salaries.
• Years 4–6: A reduced 5% tax rate applied to both corporate profits and salaries.
• Years 7–10: A 10% tax rate applied to both corporate profits and salaries.

🔹 Innovative SMEs:

For small and medium enterprises driving innovation, the focus is on incentivizing R&D investment:

• Dividend Distribution: Taxable profit is reduced by three times (300%) the amount of R&D expenses incurred.
• Reinvestment: Additional support mechanisms are available for companies that reinvest their earnings back into the business.

🔹 Companies Providing R&D Services:

Companies specializing in the delivery of research and development services enjoy a simplified and low-tax regime:

• Personal Income Tax: Salaries are taxed at a flat rate of only 5%.
• Corporate Profit Tax: A fixed rate of 5%.

🔗 https://bit.ly/4nPHbxY

Why This Matters?

These changes position Georgia as an attractive hub for technology and science-driven businesses, significantly reducing the operational costs of hiring high-value talent and reinvesting in innovation.