DOING BUSINESS IN GEORGIA IN 2018
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.
|Summary||Tax resident LLC||International Trading LLC||International Finance Company||Free zone LLC||Representative office|
|Also known as||LLC||Special trade company||International finance company||Free industrial zone company||Representative office|
|Best use of company?||All products and services||Trading with global Clients||Supplying financial services||Manufacturing and export trading||Marketing & research|
|How soon can you invoice Clients\sign sales contracts?||1 week||3 weeks||3 months||3 weeks||4 weeks|
|How soon can you hire staff?||1 week||3 weeks||3 weeks||3 weeks||4 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank account numbers?||2 months||2 months||5 months||2 months||2 months|
|How long to supply company registration/tax numbers?||1 week||3 weeks||3 months||3 weeks||4 weeks|
|Corporate tax rate on annual net profits?||15%||0%||0%||0%||None|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants and tax incentives available?||Yes||Yes||Yes||Yes||No|
|Government approval required for foreign owners?||No||No||No||No||No|
|Resident director/partner/manager/ legal representative required?||No||No||No||Yes||Yes|
|minimum paid up share capital?||US$1||US$1||US$100,000||US$100,000||None|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||No|
|Corporate bank account location?||Bank of Georgia||VTB||Liberty Bank||Peoples Bank||TBC Bank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||18%||No local sales allowed.||No local sales allowed.||0%||Cannot trade|
|Average total business set up engagement costs?||US$11,500||US$18,150||US$32,550||US$17,030||US$11,200|
|Average total engagement period?||2 months||2 months||5 months||2 months||2 months|
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Advantages and disadvantages
Advantages of Georgia company registration
- It is possible to register a Georgia limited liability company with only one shareholder and one director, both of which can be foreigners and are not required to live in the country. Furthermore, there is no minimum paid up capital requirement;
- It is easy to set up a business in Georgia because:
- The country has fewer and simpler registration steps that most other Central Asian countries. Therefore, starting a business in the country can be done in a week;
- The application is done with the National Agency of Public Registry, and can be done either by one of the shareholders or by a legal representative;
- For the above reasons, the country is ranked 16th in the Ease to do Business ranking by the World Bank.
- Foreigners registering a company in Georgia can take advantage of the country’s beneficial tax regime, including:
- Currently, the corporate tax rate is set at 15%, the 4th lowest in Central Asia after Kyrgyzstan, Turkmenistan and Uzbekistan;
- Companies are exempt from i) capital duty ii) social security contribution iii) payroll tax and iv) branch remittance tax;
- Clients that wish to set up their companies in one of Georgia’s free trade zones, are exempt from i) corporate income tax ii) property tax and iii) VAT and import/export tax for certain products.
- Furthermore, full exemption of corporate income tax on foreign source income may be granted to:
- Trading companies with Georgian sourced income i) lower than US$420,000 or ii) 5% or their total custom value of the products traded with overseas customers;
- Financial companies with foreign sourced income exceeding 90% of their total income.
- Georgia’s location can offer our Clients the following advantages:
- Georgia is both culturally similar and geographically near to Russia, optimal for Clients that wish to expand their activities in the country;
- Georgia is one of the countries which China’s “One Belt, One Road” project will pass through. The planned railway will link the Asian country with the European continent. Investments in Georgia will be able to take advantage of such link.
- Other benefits of investing in Georgia include:
- Georgia has so far concluded 52 double taxation avoidance treaties with different countries including India, Germany, China, the United Kingdom, Singapore, Ireland among others;
- The country was positively ranked as the 13th freest economy in the Heritage Foundation’s 2017 Index of Economic Freedom, a measure of freedom enjoyed in business, trade, monetary, financial, investment and labor markets. A free labor market and minimal trade regulations were listed as the main reasons for Georgia’s high rank.
Disadvantages of Georgia company registration
- Clients that wish to produce for the domestic market are faced with several challenges, including:
- Georgia has a total population of 3.5 million, the 2nd lowest in Central Asia, just behind Armenia;
- Georgia also has one of the lowest purchasing power of Central Asia; way below the medium for the European continent.
- Georgia has a very tense relationship with Russia, due to:
- Russia’s military occupies the regions of Abkhazia and South Ossetia in northern Georgia since the war in 2008 and considers them both independent territories under Russian control. Since Russia refuses to allow international interference, the issue continues to go unresolved;
- Although the vast majority of gas is supplied by Azerbaijan, Georgia’s consumption of Russia gas, part of the supply chain to Armenia, is essential to maintain a diversified gas supply and to balance prices.
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 are exempt from corporate income tax in 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.
- Time to incorporate: Four weeks
- Cost to set up: US$11,550
- Minimum capital: US$1
- Physical office required: Yes
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 15%
- Corporate tax base: Worldwide
- Shelf companies: No
- Main company type: LLC
Useful links for Georgia
Government and public authority websites:
- Georgia Tax Authority
- Central Bank of Georgia
- Georgia Stock Exchange
- Georgia Chamber of Commerce
- Georgia airports
- IMF – Country Report 2013
- PWC – Doing business and investing in Georgia
- Business Climate in Georgia
- Georgia Pocket Tax Book
- The Georgian Taxation System; An Overview
- The Legal Status of Foreigners; Georgia Law
- Tax Reforms in Georgia