Between 2020 and 2023, tax revenues from IT services in Georgia saw a fourfold increase, reflecting significant growth in the sub-sector, according to the report published by PMCG Research. Meanwhile, the entry of more international companies into the Georgian market has notably boosted the distribution of tax revenues. Despite benefiting from a reduced tax rate of 5% compared to the standard 15%, their contribution to total tax revenues grew by approximately 14 percentage points from 2020 to 2023.
Interestingly, if international companies had been taxed at the standard 15%, their share would have been nearly equal to that of local companies (with a 52%-48% split in favor of domestic companies).
The average monthly salary in the IT services sub-sector has seen substantial growth in recent years, driven mainly by an increased demand for labor following the entry of large international companies into the market. By 2023, the average monthly salary in IT services reached GEL 5,381, marking a 2.5- fold increase compared to 2020.
However, in 2023, small enterprises paid 35.6% less than the average salary. Medium enterprises’ salaries rose by 47%, reaching GEL 5,872, nearly matching those of large enterprises at GEL 5,691, indicating intensifying competition.
Labor productivity, measured as value-added per worker, grew in parallel with employment numbers. Between 2017 and 2023, this nearly tripled, reaching GEL 96,668 per employee in 2023.
Notably, although the number of employees nearly tripled in 2022, labor productivity still grew by 33%, indicating that the additional workforce generated even greater value. Growth then eased to 3% in 2023, indicating stabilization.
