Georgia is fast emerging as a technology hub in the region. With a range of incentives and programs aimed at attracting international tech companies, coupled with the construction of several technology parks, Georgia is steadily building a reputation as a destination for tech startups and established firms.

One of the most significant developments in recent years has been the tax code amendment for global IT companies. This context has brought consequent tax benefits for such companies, including no property or VAT tax, a 5% corporate profit tax (compared to the general rate of 15%), and only a 5% income tax (compared to the usual 20%). Furthermore, these companies are not obliged to employ Georgian citizens, making it easier for them to relocate their staff. Such incentives have made Georgia attractive for tech firms seeking to establish a regional presence.

The access to finance for startups has also increased significantly in Georgia. The Georgian Innovation and Technology Agency (GITA) now grants programs up to $60,000 per startup, financing 40 local startups each year, chosen by international players, mainly from Silicon Valley. GITA has also partnered with "500 Global", one of the world's most recognized accelerators, and with Bank of Georgia to run an accelerator program. $2 million have already been invested by Bank of Georgia in the past two years, with an additional $5 million to be invested in the next four years. This program has attracted applications from several countries, making Georgia a regional innovation hub.

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Georgia has also established a technology transfer program with the European Union, with GITA as a tech transfer office. Since 2018, GITA has invested $12 million in over 200 startups. Some of these startups have raised up to $140 million in additional private capital. Examples of successful Georgian startups include Pulsar AI, Payze, and Theneo, which have all gained significant recognition for their innovative solutions.

Furthermore, the ICT sector in Georgia has experienced significant growth in recent years, with a gross value added, which grew by 102% between 2016 and 2021. Export services from this sector also increased by 61% in 2021, thanks in part to the arrival of overseas IT and business process outsourcing companies such as Combined Radio Solutions and Lineate.

As for foreign investors, Lineate, a global software consultancy based in New York, established its Georgia office in 2022, for example. The company will invest $700,000 in Georgia thanks to the local FDI grant agreement. Also, Girteka, the largest asset-based transport company in Europe, has chosen Georgia as the location for its Global Business Services hub and aims to create 300 jobs there by the end of 2023.

The technology sector in Georgia is undergoing rapid development, with the construction of several technology parks, the amendment of tax laws, and the establishment of programs to attract and support tech startups. Avtandil Kasradze, Chairman of Georgia's Technology and Innovations Agency (GITA), notes that "Georgia has good talents, and our competitive workforce is making the country more and more attractive for venture investments" before adding that "the UAE is also emerging as a potential market for Georgian startups to sell their products, particularly for hardware startups thanks to free trade. Moreover, the possibility of joint ventures between Georgian and UAE startups presents an exciting opportunity for future growth and collaboration". With these factors in play, Georgia's technology sector is poised to continue its upward trajectory and establish itself as a regional leader.

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Zoom on Georgia's fintech sector

Georgia's fintech sector has been actively developing since the early 2000s, with commercial banks' introduction of digital services and products. Today, the field is represented by various companies, including 40 payment service provider organizations and diversified payment solutions. According to David Kikvidze, Chairman of the Georgian Fintech Association, "the Georgian government initiated the implementation of open banking in 2020, which presents great opportunities for commercial banks and fintech companies alike". The full implementation of Open Banking is expected to create new business models, contribute to market expansion and innovation, and create additional opportunities for tapping into new business segments.

The emergence of Kernel, a local platform providing intelligent financial tools to businesses, illustrates the notable achievements of the Georgian fintech landscape. The startup has successfully expanded into the Indian market. Furthermore, international investors like Binance have established a blockchain hub in the country to boost talent recruitment, advance blockchain education, and expedite cryptocurrency adoption within the region.

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