DOING BUSINESS IN GEORGIA IN 2022
Since 2003, Healy Consultants Group PLC assists our Clients with Georgia business set up, including i) Georgia company incorporation ii) securing government licenses iii) Georgia corporate bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions in Tblisi, Batumi and other cities.
|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||1 month||1 month|
|How soon can you hire staff?||1 week||3 weeks||3 weeks||3 weeks||1 month||1 month|
|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||1 month||1 month|
|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?
|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||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|
|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 Georgian LLC:
- Only needs to appoint one shareholder and one director. 100% foreign ownership is permitted.
- Does not need any paid-up share capital.
- Can be incorporated in just two weeks, without the shareholder or director travelling to Georgia.
- Is inexpensive to renew, with low annual government business renewal costs.
- Georgia has an attractive tax regime. For example:
- The standard corporate income tax rate is 15% for a tax-resident Georgian LLC.
- The country has a network of free zones where companies pay i) zero corporate income tax ii) exemption from VAT on imports iii) no withholding taxes imposed when repatriating capital and iv) zero tax on interest and dividends paid.
- Georgia has signed 57 double tax treaties with a number of countries including India, Germany, China, the UK, Singapore and Ireland.
- For manufacturing and distribution companies, Georgia has a strategic geographical location, with access to European, Near Eastern, Middle Eastern and Central Asian markets. For example:
- The China-Europe railway as part of China’s ‘One Belt, One Road’ project will pass through Georgia, opening up rapid East-West export routes for Georgian businesses.
- Georgia has several ports on the Black Sea (Batumi, Poti and Anaklia), making it a regional logistics hub.
- In addition to its attractive location, Georgian businesses can access a network of international free trade agreements the country has signed with i) the European Union ii) CIS states iii) Turkey iv) the UK v) Ukraine vi) China and vii) Hong Kong. Through these agreements, Georgian companies enjoy reduced tariffs on their imports to these regions.
- Through the General Schemes of Preference scheme, Georgian manufacturers enjoy reduced tariffs on exports to i) the United States ii) Canada iii) the EU and iv) Japan.
- Labour costs are low compared to much of Europe, with an average monthly wage of just US$425, while electricity costs are also lower than most of Europe.
- Because of its healthy trading and tax environment, Georgia is considered the world’s 26th freest economy, and the 18th freest in Europe, according to the US Heritage Foundation. This is above the global average.
- Other sectors which are attractive to foreign investors in Georgia are i) food production, ii) metals, iii) electronics, iv) pharmaceuticals and v) financial services.
- Georgia offers investment residence visas for international businesspeople, making it easy for entrepreneurs to relocate to the country.
Disadvantages of Georgia company registration
- Companies producing or supplying goods to the domestic Georgian market face several challenges, including:
- A population of just 3.7 million.
- Low purchasing power among Georgian consumers, and a low standard of living. Roughly one fifth of the population lives below the poverty line.
- Though Georgia scores well overall as a place to do business, foreign entrepreneurs may face corruption in daily business life, for example i) when dealing with government departments, ii) when bidding for contracts, iii) when applying for licences and iv) when settling disputes with Georgian companies or individuals. The Georgian legal system is inefficient and foreign business people may receive unfavourable treatment or lengthy court hearings.
- Georgia historically suffers from political instability, which deters many overseas investors. In particular the country’s relationship with Russia is strained, a situation exacerbated by the Russia-Ukraine war in 2022. For example:
- The Russian military continues to occupy and control the regions of Abkhazia and South Ossetia in northern Georgia.
- Although Azerbaijan supplies the vast majority of natural gas, Georgia also depends partly on Russian gas imports. During periods of political tension with Russia, Georgia’s energy security is at risk.
- Georgia is an unattractive location for high-tech industries or companies employing patented technology. Despite being a signatory to World Trade Organisation (WTO) rules on protecting intellectual property rights, these rights are poorly enforced.
- Georgian transport infrastructure is in relatively poor shape, hindering the efficient movement of goods and people.
- The official language is Georgian. While most younger Georgians speak English well, older generations do not. Foreign investors who do not speak Georgian may have difficulty when networking or negotiating deals.
- Georgia is ranked the world’s 7th easiest place to do business by the World Bank. A simple Georgian LLC:
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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