Does code 72.1 generate at least 80% of prior-year revenue?
Established Georgian research, engineering and advanced-development companies with a completed financial year and audited evidence of qualifying R&D service revenue.
- main activity code 72.1
- at least 80% qualifying prior-year revenue
- audited financial and assurance evidence
- GEL 500 application and 15-working-day review
- annual filing to GITA by 30 April
What the company or status is designed to do
R&D Service Provider Company Status is for a Georgian company whose main activity is research and experimental development in natural sciences and engineering under activity code 72.1 and whose qualifying R&D revenue was at least 80% of total revenue in the previous financial year. The current framework provides 5% profit tax and 5% tax on qualifying employee salary, subject to the status and continuing compliance.
The decisive early question is measurable: was code 72.1 the company’s main activity and at least 80% of total revenue in the previous financial year? We test the ledger and contracts before defining the audit and assurance work.
The company’s main activity and previous-year revenue must pass the statutory test
Under Georgia’s Law on Innovations and Government Resolution No. 424, the applicant must be a Georgian entrepreneurial company whose main activity is research and experimental development in natural sciences and engineering under economic-activity code 72.1. At least 80% of total revenue in the previous financial year must come from that activity.
- A completed previous financial year is needed for the revenue test.
- Qualifying R&D service revenue must be separated from implementation, support, licensing, routine development and consulting.
- The company must have no tax debt, debtor-register status, pending insolvency process or liquidation.
- Foreign ownership is not itself a bar, but the Georgian company must satisfy the activity and revenue conditions.
The 80% test is supported by audit and assurance evidence
The application is submitted to GITA with a recent company extract and previous-year financial evidence. The procedure requires audited profit-and-loss and other comprehensive-income information together with an assurance report confirming the qualifying revenue percentage.
- Company-registry extract issued no more than one month earlier.
- Audited profit-and-loss and other comprehensive-income statement for the previous financial year.
- Assurance report confirming that at least 80% of total revenue came from code 72.1 activity.
- Authority evidence that insolvency proceedings are not pending.
- Contracts, invoices, technical deliverables and accounting schedules supporting the audited classification.
The application fee is GEL 500 and the review period is 15 working days
GITA reviews the application and, if the legal conditions are met, the status is granted through the statutory government process. The current application fee is GEL 500. The procedure provides a 15-working-day review and may allow ten working days to correct specified gaps.
- Confirm the financial year and audit scope before commissioning the assurance work.
- Reconcile the legal activity code, contracts, invoices and financial-statement revenue categories.
- Answer a GITA request within the stated cure period.
- The status is treated as effective from the first day of the month in which it is granted under the current rule.
The current headline treatment is 5% profit tax and 5% qualifying salary tax
The Tax Code provides special 5% treatment for the qualifying R&D Service Provider Company framework. The company must still analyse dividends, VAT, non-qualifying revenue, contractor payments and the personal position of owners and staff separately.
- Do not apply the 5% payroll rate to a person or payment without checking the qualifying employment conditions.
- Separate non-R&D revenue and associated costs in the accounting records.
- Dividend taxation and VAT do not disappear merely because the company holds the status.
- Company status does not give foreign employees automatic work or residence rights.
The status is indefinite, but compliance must be confirmed by 30 April each year
The status has no fixed expiry date. By 30 April each year, the company must submit the required previous-year financial and assurance evidence to GITA and continue to satisfy the activity, revenue and compliance conditions.
- Calendar the audit and assurance work early enough for the 30 April filing.
- Retest the 80% revenue ratio whenever service lines or contracts change.
- Failure to file, failure to satisfy the conditions, misleading information or misuse can lead to cancellation.
- Under the current procedure, a company whose status is cancelled cannot apply for it again.
What to send us first
Start with the previous financial year’s contracts and revenue. We test the code 72.1 activity and 80% ratio before the audit, assurance or application scope is fixed.
Send us first
- Georgian company ID and current registry details
- Previous-year revenue schedule by contract and service
- Financial statements and accounting ledger extracts
- Contracts, invoices and R&D deliverables
- Current activity codes and team description
- Tax, debtor, insolvency and liquidation status
We prepare or coordinate
- Classify qualifying and non-qualifying revenue
- Calculate the prior-year 80% test
- Define the audit and assurance evidence scope
- Prepare the GITA application and manage follow-up
- Create the annual 30 April compliance calendar
Obtained or confirmed later
- Registry extract issued within the required one-month period
- Audited financial statements and assurance report
- Insolvency and other authority confirmations
- GITA and Government decision records
- Annual prior-year compliance evidence
How the work usually proceeds
The exact order depends on the service and your documents. We confirm the steps and responsibilities before professional work begins.
- 01
model the activity and transaction flow
- 02
compare ordinary and special-status treatment
- 03
register the entity and tax accounts
- 04
prepare the status application and supporting file where applicable
- 05
maintain activity, substance, allocation and reporting evidence
How this may look in a real case
An engineering-research company separates qualifying R&D contracts from routine implementation, obtains the required audit and assurance report for the previous year and keeps the 30 April annual confirmation deadline.
What can slow the process down
We check these points at the beginning and flag gaps before filing, so you can correct them while there is still time.
- Routine software implementation, support or consulting is included in the code 72.1 revenue without a supportable classification.
- The previous-year 80% test is estimated before contracts and the accounting ledger are reconciled.
- Audit and assurance work is commissioned without confirming the exact statutory report and evidence scope.
- The company misses the 30 April annual filing because year-end records are not closed early enough.
- Non-compliance is discovered after cancellation risk arises, even though reapplication may no longer be available.
A clear recommendation and a managed Georgian process
We classify the previous-year revenue and test the 80% condition before coordinating the audit, assurance, GITA application and yearly compliance process.
ITResidency.ge is operated by ASSIO LEX & ASSOCIATES LLC, the Georgian legal and business-services provider for the engagement.
- Code 72.1 activity classification
- Prior-year 80% revenue test
- Audit and assurance evidence plan
- GITA application and follow-up
- Annual 30 April compliance calendar
Frequently asked questions
What is R&D Service Provider Company Status in Georgia?
It is a Georgian innovation status for an established company whose main activity is research and experimental development in natural sciences and engineering under activity code 72.1 and whose previous-year qualifying revenue passes the statutory test.
What is the 80% revenue requirement?
At least 80% of the company’s total revenue in the previous financial year must come from the qualifying code 72.1 activity. The percentage must be supported by audited financial information and an assurance report.
Can a newly incorporated company qualify immediately?
Normally not where it has no completed previous financial year and no audited revenue record for the 80% test. Formation alone does not establish eligibility.
Does ordinary software development count as R&D?
Not automatically. Routine implementation, maintenance, support and consulting should be separated. The contracts and deliverables must support the qualifying research and experimental-development classification.
Can a foreign-owned Georgian company qualify?
Foreign ownership is not itself a bar. The Georgian applicant must satisfy the activity, prior-year revenue, audit, assurance and compliance conditions.
What documents are required?
The application normally includes a recent registry extract, audited prior-year profit-and-loss and other comprehensive-income information, an assurance report confirming the 80% test and evidence that insolvency proceedings are not pending, supported by contracts and accounting schedules.
What is the application fee and review time?
The current application fee is GEL 500 and the procedure provides a 15-working-day review period. A specified deficiency may be given a ten-working-day cure period.
What tax rates apply?
The current framework provides 5% profit tax and 5% tax on qualifying employee salary. Dividend tax, VAT, non-qualifying revenue and other payments must be analysed separately.
How long does the status last?
The status is granted without a fixed expiry date and is treated as effective under the statutory month-of-grant rule. Indefinite status does not remove the annual compliance filing.
What must be filed by 30 April?
Each year the company must submit the required previous-year financial and assurance evidence to GITA and continue to satisfy the 72.1 activity, 80% revenue and compliance conditions.
Can the status be lost?
Yes. Failure to file, failure to meet the conditions, misleading information or misuse can lead to cancellation. Under the current procedure, a company whose status is cancelled cannot apply for it again.
Does the status provide residence or work rights?
No. Foreign owners and staff still need separate work-right and residence reviews.
Can ITResidency.ge review eligibility before the audit?
Yes. We can first classify revenue and contracts, test the 80% ratio and compliance conditions, then coordinate the correct audit, assurance and application scope if the route is realistic.
