Category: კატეგორიის გარეშე

Our client companies that have foreign employees often ask us questions regarding the upcoming labor migration rules. On June 26, 2025, the Parliament of Georgia adopted a package of amendments to the labor migration laws. Starting March 1, 2026, the simple registration system is being replaced by a strict, mandatory two-stage permitting process.

 

In this article, we will simply explain what the “Special Labour Permit” entails, who is exempt, and what you should consider to avoid financial penalties.

Who Does the New Regulation Apply To?

Obtaining the Special Labour Permit is mandatory for foreign nationals without Permanent Residence (PR) who are engaged in activities for financial gain. Specifically, this applies to:

• Labor Migrants: Foreigners working for local Georgian employers.
• Self-Employed Foreigners: Individuals registered as Individual Entrepreneurs (IE) or partners in Georgian companies.
• Digital Nomads/Remote Workers: Those working remotely for a Georgian entity. Any link to a Georgian employer triggers the permit requirement.

Who is Exempt?

The law provides specific exemptions. You do not need this permit if you fall into one of these categories:

• Holders of Investment Residence Permits and Permanent Residence Permits.
• Refugees, asylum seekers, and accredited journalists.
• Remote workers whose work is performed exclusively for foreign entities with no local economic footprint.

What Are the Stages of the Process?

Starting in March 2026, legalizing your work status follows a strict sequence:

 

1. Stage 1: The Special Labour Permit. The local employer submits the application for employees, whereas self-employed foreigners apply on their own behalf. The Ministry of Labor, Health, and Social Affairs reviews the application, which takes up to 30 calendar days.
2. Stage 2: Immigration Status (Visa or Residency). Once the permit is granted, the applicant must apply for an immigration status. If the applicant is outside Georgia, they must apply for a D1 Immigration Visa within 30 days. If they are already in Georgia, they must apply for a Work Residence Permit or IT Residence Permit within 10 days.

Critical Requirements & Rejection Risks

The Ministry may reject or revoke a permit based on several critical factors:

• Labor Market Needs: Applications can be rejected if the foreigner’s qualifications do not match market needs or if the profession is classified as “restricted” to protect local labor.
• Turnover Threshold: The underlying residency often requires the employing company to have an annual turnover of at least 50,000 GEL per foreign employee.
• Administrative Delays: Renewal applications must be submitted at least 30 days prior to expiration. Late filings will lead to administrative rejections.

What Happens in Case of Rule Violations?

The 2026 rules introduce significantly higher penalties for non-compliance:

 

• Unauthorized Work: Foreigners working without a permit and employers hiring them face a fine of 2,000 GEL for the first offense.
• Repeated Violations: For repeated offenses, fines may be doubled or tripled.
• Administrative Breach: Failing to notify the Ministry regarding a contract termination can result in fines ranging from 1,000 to 2,000 GEL.

What Should Already Employed Foreigners Do?

For foreigners who are already working and registered in the Ministry’s database before March 1, 2026, there is a transition period. These individuals have until January 1, 2027, to obtain the new Special Labour Permit and align their residence status with the new rules. In order to fully benefit from the transition period for employees already working for the company, employers must ensure that these employees are registered on the Migrant Portal, as required by law. Otherwise, starting March 1, 2026, they will be required to obtain a labor permit.

 

How “Ants” Can Help Your Business

Navigating these changes requires meticulous timing to ensure no gaps in legal status. Given the 30-day processing times and strict 10-day residency filing windows, early preparation is the only way to avoid administrative rejections and fines. Our experienced team provides:

 

• Full Process Management: We handle the end-to-end coordination between the Ministry of Labor and the Public Service Hall (House of Justice).
• Advance Organization: Even if your employees are already registered under the old system, we help organize all documentation in advance to ensure a seamless transition to the new Work Permit and Residency status.
• Compliance Audit: We review your current employment contracts and prepare the necessary documentation to ensure they meet the 2026 legal standards before you apply.

Contact us today so we can assist you in managing this process and ensuring full compliance for your business or employment.

Georgia’s Innovation Law

Georgia has introduced a new innovation-support framework under the Law on Innovations and related Tax Code amendments, effective from 24 September 2025. The reform allows companies to obtain one of three official statuses:

1. Innovative Startup
2. Innovative SME
3. R&D Company (R&D Service Provider)

Each status provides specific tax incentives and is granted through the Innovation Registry administered by GITA. Below is a practical summary of benefits, eligibility, application timelines and what is required to maintain status.

 

1) Innovative Startup Status

Tax benefits (up to 10 years, phased)

Innovative Startup status is the most generous and applies in stages:

• Years 1–3

o 0% Personal Income Tax (PIT) on employee salaries
(applies within a 10,000 GEL monthly cap per employee set by the Government).

• Years 4–6

o 5% PIT on salaries

o 5% Corporate Income Tax (CIT) on distributed profit.

• Years 7–10

o 10% PIT on salaries

o 10% CIT on distributed profit.

For Innovative Startup status, the tax relief is phased and tied to renewal thresholds. The company receives Year 1–3 benefits based on the initial qualification, but to continue into Years 4–6 it must confirm that it has attracted a significantly higher cumulative investment (around 5 million GEL) and still meets all innovation and compliance criteria. To extend the status further into Years 7–10, the cumulative investment requirement increases again (around 15 million GEL). In other words, the state expects startups to demonstrate real scale-up through verified funding at each renewal stage, otherwise the preferential tax regime ends.

Important restriction: Innovative Startup status cannot be used simultaneously with other special IT regimes (such as International Company or Virtual Zone Person).

Eligibility criteria (core requirements)

A company may qualify if it:

• Is developing an innovative product, service, technology, or business process (new or substantially improved).
• Received within the last 2 years either:

o ≥ 100,000 GEL investment from an accredited venture/angel/accelerator source, or

o ≥ 150,000 GEL grant funding from a recognized innovation or development program.

• Demonstrates that most revenue and expenses relate to the innovative activity.
• Has no tax arrears, is not insolvent, and not in liquidation.

Documents and audit requirement

Typical submission package includes:

• Company registration extract and ownership details.
• Description of the innovation and business plan/roadmap.
• Investment or grant agreements and proof of receipt.
• Audited financial statements and/or auditor’s assurance confirming that activity and costs are innovation-related.
• Tax compliance confirmation.

Keeping the status

• Startup status is granted for 1 year.
• To keep it, the company must re-apply annually through the Registry and confirm it still meets all criteria.
• Renewal is possible up to a maximum total of 10 years, if requirements continue to be satisfied.

 

2) Innovative SME Status

Tax benefits

Innovative SMEs receive an R&D-based tax incentive:

• When profit distribution triggers CIT under Georgia’s “Estonian model,” the company may reduce the taxable base by 3 times qualifying R&D expenses from the previous financial year.

This effectively lowers the tax cost of dividends for R&D-intensive businesses.

Eligibility criteria (including SARAS category rule)

To apply, a company must:

• Be registered in Georgia.
• Be classified only as a Category 3 or Category 4 entity under SARAS enterprise size categories.
  (Larger Category 1–2 entities are not eligible for Innovative SME status.)
• Have R&D expenses in the prior year of:

o at least 100,000 GEL, and

o at least 5% of annual revenue.

• Meet at least one innovation indicator, such as:

o owning a patent or registered/deposited software tied to the R&D work,

o purchasing R&D services from accredited/certified entities,

o maintaining R&D cost accounting in line with approved rules.

• Have no tax debt, insolvency, or liquidation proceedings.

Documents and audit/verification requirement

The application typically includes:

• Financial statements and SARAS category confirmation (only category 3 and category 4 entities are eligible).
• R&D expense calculation with methodology.
• Supporting R&D evidence (contracts, project descriptions, technical documentation).
• Independent verification / auditor or accountant confirmation is expected to support R&D expense eligibility.

Keeping the status

• Innovative SME status has no fixed end date, but it remains valid only while requirements continue to be met.
• Annual compliance confirmation is required: each year the company must submit updated evidence showing:

o it still qualifies as Category 3 or 4 under SARAS criteria,

o R&D spending thresholds are met,

o R&D costs are properly tracked and supported.

• If documentation is weak or thresholds are not met, status may be suspended or revoked.

 

3) R&D Company (R&D Service Provider) Status

Tax benefits

R&D Companies enjoy stable low rates:

• 5% PIT on salaries
• 5% CIT on distributed profit

Eligibility criteria

This status is for companies whose main business is delivering R&D services (e.g., engineering R&D, software R&D, applied science, lab/prototype work). Approval focuses on whether the company:

• Performs real R&D operations in Georgia.
• Employs qualified R&D personnel.
• Has clear R&D project documentation.
• Keeps transparent R&D cost accounting.
• Has a clean tax/compliance record.

Documents and audit/verification requirement

Applicants typically submit:

• Service and project portfolio showing R&D nature.
• Staff qualifications and infrastructure overview.
• R&D accounting records and cost allocation method.
• Auditor/accountant verification supporting R&D classification and expenses.

Keeping the status

• Status is granted indefinitely, but requires annual compliance confirmation.
• Each year the company must prove R&D services remain the core activity and documentation remains audit-ready.

 

Application Timeline (How long it takes)

The law sets clear deadlines mainly for GITA’s review stage:

1. GITA verification – 15 working days
   From the moment your application is submitted, GITA has 15 working days to review and verify compliance.
2. If additional information is required

o GITA issues a request for corrections/additional documents.

o The applicant has 10 working days to submit missing or corrected materials.

o After resubmission, GITA reviews within another 10 working days.

3. Government approval
   Once GITA confirms eligibility, the file is forwarded through the Ministry of Economy to the Government for final approval. 

How Ants Can Help

Innovation status can reduce salary taxes and profit-distribution tax significantly, but approval and renewal depend on proper R&D accounting, strong documentation, and audit-level evidence.

Ants supports clients with:

• Managing the entire application process and annual confirmations,
• eligibility assessment and choosing the best status,
• structuring and tracking R&D costs correctly,

 

 

Company X and Company Y are identical in terms of their business sector, size, management style, and other aspects. The only significant difference between them is that Company X opted for outsourced accounting services, while Company Y decided to handle accounting internally by hiring an employee. After a few months, Company X smoothly handles all accounting and tax challenges, while Company Y repeatedly runs into multiple troubles. Specific cases are discussed below:

• Qualification and Competence – Company X receives prompt and accurate answers to all its accounting and tax questions. Company Y, on the other hand, encountered several situations where its accountant’s competence was insufficient to plan complex transactions. In Company X’s case, the outsourced accountant involved other team members as needed — including a tax expert and a financial consultant — who jointly analyzed the transaction and advised the client company on the best approach. Company Y’s in-house accountant had no one to consult for a second opinion.
• Tax Liability Insurance – Company Y made a mistake that resulted in a 10,000 GEL fine by the tax authority. Although the company scolded its accountant, it had to pay the fine itself. In a similar situation, Company X turned to its outsourced accounting provider and requested reimbursement for the fine. The outsourced accounting firm investigated and confirmed that the fine was caused by a mistake made by the assigned accountant. As a result, the outsourced accounting firm reimbursed the client company for the amount of the tax fine.
• Stability – Offended by the complaint, the accountant of Company Y resigned and gave the legally required one-month notice period during which the company had to find a replacement. It was very difficult for Company Y to find a qualified accountant, and when they finally hired one, the new accountant refused to take responsibility for the previous records and balances prepared by the former accountant. In contrast, the outsourced accountant assigned to Company X decided to travel abroad for two months, and the outsourcing firm immediately replaced them to ensure service continuity. In addition to the assigned accountant, the outsourced service also involved an assistant-accountant and a portfolio manager, so the handover process was smooth.
• Software Tools – After its accountant left, Company Y discovered that its accounting was being done on outdated and unlicensed software lacking automation and integrations. The company asked the new accountant to migrate old records and balances to a modern system, but the accountant responded that the task was too labor-intensive and could not be done. Company X did not face such issues, as its outsourced accounting provider had used modern accounting software from the beginning and maintained well-organized records for all transactions.

 

In conclusion, Company X spent less money and received higher-quality results, while Company Y spent more and ended up with disorganized accounting, poor data quality, and tax risks.