Georgia is located between Asia and Europe. This strategically located country gives direct reach to the European, Gulf Co-operation Council and the CIS (Commonwealth of Independent States) countries.

Georgia takes pride in massive economic reforms and a sharp decline in the poverty rate. In 2016, the country successfully signed the Free Trade Agreements with its trade partners like the European Union and China, and to date attracts laudable Foreign Direct Investment.

The country’s economic growth has seen a massive surge in all aspects of agriculture, tourism and logistics. The government is taking all measures to keep the economy as transparent and open as possible to attract global players in its country’s growth.

A strong and efficient political environment, with policies serving national priorities, makes Georgia ‘No.1 for Business’

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Perks Of Setting Up Companies In Georgia

1. Access to Free Industrial Zone.

There are four FIZ in the country of Georgia. The tax regime in these FIZ is very conducive to operate any business. There is no tax on import of goods and export of products manufactured in the FIZ. 

There are no restrictions in manufacturing any goods and provision of services except for the production of arms and ammunition and nuclear substances.

Unlike other production zones, FIZ has no trade barriers or foreign exchange regulations and payment in any currency is allowed.

The Types of companies that are flourishing are General Partnership, Joint-Stock Company and Limited Liability Company.

2. Lucrative Tax Benefits

The FIZ is a vision by the Georgian Tax Code. The establishment of business in a FIZ provides exceptional tax relief to the company. There is zero property tax on the entities established under FIZ norms. 

Nil tax on import goods and transactions among FIZ entities, exemption from the tax on profit and unrestricted repatriation of capital are some of the financially supportive codes. There is a minimal tax of 4% on the import and export of raw materials between FIZ and Georgia. 

The VAT and Dividend distribution tax in FIZ is zero.

Foreign shareholders of these companies in FIZ are not taxed on the interests and dividends received. The new businesses can duly compete with the international markets considering these tax sops. 

3. A robust banking system

One of the prerequisites for a business entity in Georgia is a corporate bank account for financial settlements with the opposite party during business transactions.

The country’s banking policy is not a member of the global CRS (Common Reporting System) which is a route to exchange client information globally. Client information is not shared by the Georgian banks to a third country.

All banks are operated by foreign shareholders and state interference is absent. 

Consequently, there is full protection of the business assets of the entrepreneurs, due privacy to the businessmen and confidentiality of finances for non- residents.

A corporate bank account has added advantages of internet banking,

low bank charges and transfer costs, current accounts in the client’s preferred currency and rapid fund settlements. SWIFT codes are also available for transfer of funds using International Bank account number (IBAN) format.

Similar privacy and banking features are available for personal bank account holders.

4. A supportive legal structure

The legislative ambience in Georgia is comprehensive and flexible for new businesses. Enterprises need the lowest number of permits and licenses compared to other states in Europe and the related procedures to obtain permits are completed within 60 days.

Customs is very fast and efficient and the administration is business- friendly, saving time for entrepreneurs. The Free Trade Agreement with a vast number of countries is conducive to the business as the products attract no tariffs. 

Undoubtedly, Georgia ranks 2nd in Ease of Starting Business globally.

5. Diversity in Geography and industries

Georgia has a vast variety of industries, thanks to its geography. Agriculture adopting new technology is as common as Information Technology. The metro areas have seen a

boom in Aerospace industries. The well connected highway system and the large Port of Savannah, ensure that businesses have access to easy interstate journeys and shipping their products smoothly.

Business Entities That Can Be Set Up In Georgia

The country follows The Law of Entrepreneurship of 1994 to permit the below enterprises to operate within its jurisdiction:

1. LLC (Limited Liability Company)

The most common business entity is an LLC where the liability is limited only to the contribution of the partner to the business. The ownership is open to foreign investors wholly provided the details are disclosed to the general public.

Yearly Financial statements have to be submitted by the LLCs to the appropriate authorities.

2. LC (Limited Partnership)

A Limited Partnership is between a few people who conduct a business under one name. Partners can be the citizens of Georgia or any legal body.

The profits are distributed as per the terms and conditions mentioned in the company policies.

Limited partners are not liable for the debts of the company, unlike the general partners who hold personal liability to the debts.

3. GP (General Partnership)

A General Partnership is formed by the citizens of Georgia. It is an independent enterprise in one name. The liability to the creditors is equal. Each partner holds equal rights over the shares of the company and is free to review the books of accounts.

4. JSC (Joint Stock Company)

In such a company the partner is liable only to the extent of shares issued to the member. The capital pooled is by all the members which is divided into shares. Hence, the loss to personal property of the members, in case of loss to the company, is avoided.

5. CO (Co-operative)

A Co-operative is liable with its property before the creditors. It has to be registered in the Public registry and is formed to grow the business and profits of the members.

6. IE (Individual Enterprise)

In this business the entire liability falls on the sole-proprietor of the firm. Georgia encourages foreign citizens to form an Individual enterprise. The application and documents alongwith the fees have to be submitted to initiate the process.

7. BO (Branch Office) and Representative Office

A branch is the same entity which is authorised to work on behalf of the main corporation. It is generally set up in Georgia to enjoy the tax benefits provided by the conducive tax structure of the country.

Conclusion

Georgia has made its administration and policies as smooth and glitch free as possible to encourage investments in all fields of economic growth.

The fiscal policies are made in favour of new entrepreneurs and the administration ensures fiscal discipline is maintained by a balanced budget and low debt-per-capita levels.

The country is also encouraging crypto investments by minimizing the regulatory restrictions to almost zero.

Enterprises should definitely consider Georgia as an investment haven in the future.

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