DOING BUSINESS IN GEORGIA IN 2021
Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Georgia. Our services include i) Georgia business registration ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.
| Compare different Georgian entities | Tax resident LLC | International Trading LLC | Intl. Finance Company | Free zone LLC | Virtual IT Zone Company | Representative office |
|---|---|---|---|---|---|---|
| Also known as | LLC | Special trade company | Intl. finance company | Free industrial zone company | VZE | Representative office |
| Best use of company? | All products and services | Trading with global Clients | Financial services | Manufacturing & export trading | Intl. IT services | Marketing & research |
| How soon can you invoice Clients\sign sales contracts? | 1 week | 3 weeks | 3 months | 3 weeks | 4 weeks | 4 weeks |
| How soon can you hire staff? | 1 week | 3 weeks | 3 weeks | 3 weeks | 4 weeks | 4 weeks |
| How soon can you sign a lease agreement? | 1 week | 1 week | 1 week | 1 week | 2 weeks | 1 week |
| How long to supply corporate bank account numbers? | 2 months | 2 months | 5 months | 2 months | 2 months | 2 months |
| How long to supply company registration/tax numbers? | 1 week | 3 weeks | 3 months | 3 weeks | 4 weeks | 4 weeks |
| Corporate tax rate on annual net profits? | 15% | 0% | 0% | 0% | 0% | None |
| Limited liability entity? | Yes | Yes | Yes | Yes | Yes | No |
| Government grants and tax incentives available? | Yes | Yes | Yes | Yes | Yes | No |
| Government approval required for foreign owners? | No | No | No | No | No | No |
| Resident legal representative required? | No | No | No | Yes | No | Yes |
| minimum paid up share capital? | US$1 | US$1 | US$100,000 | US$100,000 | US$1 | None |
| Can bid for Government contracts? | Yes | Yes | Yes | Yes | Yes | No |
| Corporate bank account location? | Bank of Georgia | VTB | Liberty Bank | Peoples Bank | VTB | TBC Bank |
| Can secure trade finance? | Yes | Yes | Yes | Yes | No | No |
| Legally tax exempt if properly structured? | No | Yes | Yes | Yes | Yes | No |
| VAT payable on sales to local customers? | 18% | 18% | 18% | 0% | 0% | Cannot trade |
| Average total business set up engagement costs? | US$11,650 | US$18,150 | US$32,550 | US$17,030 | US$12,150 | US$11,200 |
| Average total engagement period? | 2 months | 2 months | 5 months | 2 months | 3 months | 3 months |
| Accounting and tax considerations | Tax resident LLC | International Trading LLC | Intl. Finance Company | Free zone LLC | Virtual IT Zone Company | Representative office |
|---|---|---|---|---|---|---|
| Statutory corporate tax payable? | 15% | 0% | 0% | 0% | 0% | None |
| VAT payable on sales to local customers | 18% | 0% | 18% | 0% | 0% | Cannot trade |
| Withholding tax on payments to overseas shareholders? | 5% | 5% | 5% | 5% | 5% | 5% |
| Must file annual financial statements? | Yes | Yes | Yes | Yes | Yes | Yes |
| Monthly VAT reporting to the Government? | Yes | Yes | Yes | Yes | Yes | Yes |
| Social contribution tax? | 2% | 2% | 2% | 2% | 2% | 2% |
| Access to double taxation treaties? | Yes | Yes | Yes | Yes | Yes | Yes |
| This entity enjoys Government incentives? | Yes | Yes | Yes | Yes | Yes | Yes |
| Legally tax-exempt entity? | No | Yes | Yes | Yes | Yes | No |
| Company Registration | Tax resident LLC | International Trading LLC | Intl. Finance Company | Free zone LLC | Virtual IT Zone Company | Representative office |
| Minimum number of shareholders/partners? | 1 | 1 | 1 | Parent company | 1 | 1 |
| Minimum number of directors/managers? | 1 | 1 | 1 | 1 | 1 | 1 |
| Minimum paid up share capital? | US$1 | US$1 | US$100,000 | US$1 | US$1 | N/A |
| Shareholder and Director documents must be translated? | Yes | Yes | Yes | Yes | Yes | Yes |
| Shareholder and Director documents must be apostilled? | Yes | Yes | Yes | Yes | Yes | Yes |
| Foreign director must obtain work permit? | Yes | Yes | Yes | Yes | Yes | Yes |
| Shelf companies available? | Yes | Yes | Yes | Yes | Yes | Yes |
| Time to incorporate a new entity? | 2 weeks | 3 weeks | 2 months | 3 weeks | 4 weeks | 4 weeks |
| Can easily convert to a local PLC company? | Yes | No | No | No | No | No |
| This entity will likely be regulated by? | Ministry of Finance | Ministry of Finance | Ministry of Finance | Ministry of Finance | Ministry of Finance | Ministry of Finance |
| Business Considerations | Tax resident LLC | International Trading LLC | Intl. Finance Company | Free zone LLC | Virtual IT Zone Company | Representative office |
| Can invoice local customers? | Yes | No | No | Yes | Yes | No |
| Can hire local staff? | Yes | Yes | Yes | Yes | Yes | Yes |
| Can rent local office space? | Yes | Yes | Yes | Yes | Yes | Yes |
| Can secure resident visa for business owner? | Yes | Yes | Yes | Yes | Yes | Yes |
| Monthly VAT reporting to the Government? | Yes |
| Maximum number of staff allowed? | No maximum limit |
| Our Client must travel to Georgia? | No |
| Can be wholly foreign owned? | Yes |
| Maximum shareholding for foreigners? | 100% |
| Govt. approval required for foreign owners? | No |
| Temp. physical office solutions available? | Yes |
| You need local resident as bank signatory? | No |
| Withholding tax on payments to shareholders? | 5% |
| Must appoint an auditor? | Yes |
| Dividends received are legally tax exempt? | No |
| Security deposit to be kept with Government? | No |
| Must sign an office lease agreement? | No |
| S.holder/director docs attested? | Yes |
| Foreign non-resident director needs a work permit? | No |
| S.holder/director docs translated? | No |
| Expatriate to local staff ratio? | Depends on business activity |
| Other useful information | |
| Georgia has signed free trade agreements? | Yes |
| Georgia is a member of WIPO/TRIPS? | Yes |
| Georgia is a member of the ICSID? | Yes |
| Average customs duties suffered? | 0-12% |
| Average monthly office rent? (US$/sq m) | 35 |
| Minimum statutory annual salary? | US$7,1 for private and US$125 for government sectors |
| Average US$ salary for local skilled staff? | US$425 |
| Overseas remittance currency controls? | None |
| Banking considerations | |
| Multi-currency bank accounts available? | Yes |
| Corporate visa debit cards available? | Yes |
| Quality of e-banking platform? | Moderate |
Georgia business setup summary
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Advantages and disadvantages
Advantages of Georgia company registration
- Georgia is ranked the world’s 7th easiest place to do business by the World Bank. A simple Georgia LLC:
- Only needs to appoint 1 shareholder and 1 director, who can be any nationality;
- Does not need any paid-up share capital;
- Registration can be completed in 2 weeks, without travel;
- Has a low annual maintenance fee.
- Georgia is ranked 14th in the World Bank’s Paying Taxes 2020 index. In practice, that means international Clients benefit from an attractive tax system, from the advantages of the tax-free zones and various government incentives.
- Georgia’s geographical location benefits from:
- China’s ‘One Belt, One Road’ project. The planned railway will link China to Europe, passing through Georgia. This will open up fast routes for Georgian export businesses to faster reach Asia to Europe;
- The country’s position on the Black Sea, with several seaports (Batumi, Poti and Anaklia), which makes it a regional logistics hub;
- Georgia is culturally similar, and geographically close to, Russia, making it ideal for Clients wanting to expand activities into Russia.
- International clients can take advantage of reduced tariffs due to the number of existing free trade agreements Georgia has signed with:
- The European Union, CIS countries, Turkey, United Kingdom, Ukraine, China and Hong Kong;
- There General Schemes of Preference allow Georgian manufacturers to enjoy a lower tariff when exporting products to the United States, Canada, the EU and Japan;
- Georgia plans to sign an FTA for goods, trade of services and investments with India and Israel.
- Georgia has signed 56 double taxation avoidance treaties with countries including India, Germany, China, the United Kingdom, Singapore and Ireland;
- Georgia was positively ranked the world’s 12th freest economy in the Heritage Foundation’s 2020 Index of Economic Freedom. Georgian overall ranking has increased due to improvements on all indicators related to the rule of law;
- Clients involved in energy-intensive business can take advantage of low electricity costs of just 4 cents per kWh;
- Georgia has a talented workforce with an average monthly wage of just US$425, much lower than other European countries;
- Georgia does not automatically exchange financial data with other countries. It is not a member of the CRS and does not plan to sign an information exchange agreement in the near future;
- Georgia offers investment residence visas for international businesspeople, making it easy for entrepreneurs to relocate to the country.
Disadvantages of Georgia company registration
- Clients wishing to produce or supply goods for the domestic market face several challenges, including:
- A population of just 3.7 million;
- Low purchasing power. The standard of living in Georgia is also low. The National Statistics Office of Georgia (Geostat) reports that 20% of the population lives below the poverty line. Some multinational investors may find it a difficult country to adapt to;
- Georgia has a strained relationship with Russia, which can impact sentiment and investor confidence. For example:
- Since the 2008 war, Russia’s military continues to occupy and control the regions of Abkhazia and South Ossetia in northern Georgia. This may negatively impact Georgia economy, especially hospitality and real estate;
- Although Azerbaijan supplies the vast majority of gas to Georgia, Georgia also depends partly on Russian gas imports. During periods of political tension with Russia, Georgia’s energy security is put at risk.
- Georgia is ranked the world’s 7th easiest place to do business by the World Bank. A simple Georgia LLC:
Best uses of a Georgian company
- Georgian international trading companies and international financial companies are tax efficient solutions for Clients with international operations. Such companies can benefit from complete corporate tax exemption on their worldwide income;
- Clients that wish to explore the Russian market, can consider setting up their operations in Georgia as the country allows easy access to Russia and offers several tax advantages for local companies.
