Georgia opens up great prospects for doing business on an international scale. Moreover, in 2020, the number of options available for tax optimization by foreign IT firms and maritime companies in Georgia has expanded.
Benefits of registering a company in Georgia
In addition to the above advantages, the registration of companies in Georgia is beneficial for the following reasons:
- 53 existing double taxation treaties;
- free trade zone with the EU, CIS, EFTA, Great Britain, Ukraine, Turkey, China, and Hong Kong;
- location within 2 hours of flight from major European, and Russian cities and the western part of China;
- low cost of banking services;
- lack of language barriers (most Georgians understand and speak Russian perfectly);
- there is no exchange control;
- developed transport system;
- availability of state programs of assistance to investors, allowing them to receive a grant of up to 1,000,000 lari;
- there is no automatic exchange of tax data with other countries.
Ease of registration and doing business in Georgia
If Georgia has been in the TOP-10 countries of the world in the Doing Business rating for two years in a row, then there are reasons why analysts of international organizations decided so:
- simple and accessible corporate law;
- minimum requirements for the company;
- no restrictions to the nationality and residence of the founders;
- high speed of registration (it will be possible to create a company in a day);
- reception of documents on the principle of a “single window”;
- relatively small registration costs (about $ 60 for express registration or $ 30 – if the next day);
- minimal contact with regulatory authorities;
- submission of reports and payment of taxes through electronic services;
- there are no sudden inspections from the tax, the Ministry of Emergency Situations, sanitary and epidemiological stations, and other regulatory agencies.
Registering a company in Georgia in 2021 is as simple and easy for foreigners as in previous periods. Given the pandemic and closed borders, you can create a legal entity or buy a ready-made company remotely through a trusted representative.
Tax advantages of Georgian jurisdiction
The main factor influencing the decision to register a company in Georgia is the availability of opportunities for tax optimization. It should be noted that businesses of different sizes and types can take advantage of the favorable tax regime here.
Free industrial zones in Georgia
Free industrial zones are special tax-free territories created in Georgia to attract foreign investors. There are 4 operating FIZ, where it will be possible to register the company, they are located in Tbilisi (Gldani region), Poti (seaport area), and two Kutaisi (automobile plant).
By registering a company in the FIZ of Georgia, a foreign manufacturer gets the opportunity to export products abroad completely without taxes (like an offshore regime, only you do not need to look for island states to register):
- 0% on corporate profits;
- 0% VAT;
- 0% on the property;
- 0% from dividends;
- 0% customs duties.
- Obligations that remain:
- 20% income tax – responsibility for the calculation and payment falls directly on the employees;
- 2% contribution to the pension fund;
- annual license fee (depends on the type of activity and type of license).
In addition to tax advantages, registration of a company in the FIZ of Georgia is also beneficial due to:
- availability of a fully prepared infrastructure for business (warehouse and office premises, parking lots, ramps, communications);
- direct access to transport hubs: international highways, airports, seaports, railways;
- cheap labor.
The PPE regime in Georgia is suitable for medium and large companies producing and exporting goods. Registration in a tax-free zone will reduce tax and operating costs, which will make the products more competitive in the international arena.
Small business
Suitable for foreigners doing international business on a small scale – no more than GEL 500,000 per year (about $ 150,000). The advantage of this regime is the low tax rate – only 1%. An entrepreneur registered in the “Small Business” regime can issue invoices to foreign counterparties and receive payment not only to accounts in Georgian banks but also in foreign payment systems.
In practice, the “Small Business” model is in demand among foreign freelancers and IT specialists. They most often use it for cooperation with foreign companies.
Virtual zone face
The mode is intended for IT companies and companies related to the IT sphere. Foreigners who registered a company in Georgia and received a Virtual Zone license do not pay taxes on export earnings, in particular: on corporate profits and VAT, as well as customs duties.
Their obligations remain:
- 5% from dividends;
- up to 1% property tax (payable if you have real estate);
- 20% income tax and 2% contributions to the pension fund (paid if there are resident employees).
International company
A new regime was introduced in the fall of 2020. It is aimed at international IT and maritime services companies. By registering a company in Georgia and having received the status of an “International Company”, the business gets the opportunity to save on taxes:
- corporate profit 5% instead of 15%;
- income for wages 5% instead of 20%;
- for dividends 0% instead of 5%.
In other words, only 5% of the tax is withheld when withdrawing profits from international companies, and only 5% when paying salaries. Such tax conditions are among the most attractive in the world, apart from offshore jurisdictions. But working through the latter creates certain obstacles associated with additional bank checks.
Outcome
Registration of a company in Georgia in 2021 will reduce business costs and simplify entry into the international market; a company in Georgia is also interesting for those wishing to operate in the Caucasus region or trade with counterparties from the Persian Gulf countries.
