The price for this service starts at US$ 1,000
For quite a few years now Georgia has been an attractive country for investors from around the globe. The Georgian Government passes regulations that significantly simplify the company registration procedure. In addition, they are improving the tax legislation and establishing special economic zones with notable tax reductions. The progress that Georgia has made does not escape international attention. Thus, World Bank’s “Doing Business” annual report currently ranks this country 6th for the ease of doing business there. Apart from favorable taxation, there are other inviting opportunities in Georgia as well. Goods manufactured on its territory receive the “Made in Georgia” label, which allows selling them without customs duties to more than fifty other countries. Among others, Georgia has made free trade agreements both with the EU and with China – a combination rarely found in the modern world.
Our company has vast experience in helping business people register legal entities in Georgia. We have been in this industry for quite a while, and we have made good contacts with all relevant state and government agencies that are involved in company registration in this or that way. Our clients enjoy the full range of services that a business company may require in Georgia. We prepare the constitutive documents, have the company registered with the state authorities, provide accounting service, nominee service, draft employment agreements, and so on. Our skilled lawyers and accountants know Georgian legislation inside and out, are fluent in English and reside in Georgia. So, we know the local ways and at the same time we speak your language so we can understand your needs exactly.
We would like to make it clear that speaking Georgian is essential when having a company registered in this country. Even though many people there, especially the younger ones, do have (some) English, all the application forms and other documents have to be filled out in Georgian. The same goes for communication with state, legal, and tax authorities and bank officers: they have to be spoken to in Georgian. Our knowledge of the procedures and of the Georgian language permits having a company registered in this country almost in an instant. We will also be happy to assist you in opening a corporate bank account in Georgia. Trying to do these things on your own would be risky and burdensome indeed. Without a deep knowledge of the local legislation and the Georgian language, having a business company registered in this country may at least take a very long time. At most, such an attempt may plainly fail.
The price of our company registration service in Georgia starts at US$ 1,000. The ultimate price will depend on whether the constitutor is a private or a legal entity, on the form of ownership your new company will have, on the company location – mainland, Virtual Zone, or Free Industrial Zone – and some other factors.
Legal entity types in Georgia
In 2018, direct foreign investments in Georgia reached US$ 1.232 billion. The investments were distributed among countries as follows:
- Azerbaijan – US$ 240 million, 19.5% of total investments;
- Great Britain – US$ 203 million, 16.5%;
- The Netherlands – US$ 167.9 million, 13.6%;
- The USA – US$ 103 million, 8.4%;
- Panama – US$ 74.7 million, 6.1%;
- China – US$ 65.4 million, 5.3%;
- The Russian Federation – US$ 60.1 million 4.9%.
Other countries also expressed interest in doing business in Georgia. Such neighboring states as Kazakhstan, Turkey, Ukraine, and Armenia made notable contributions to foreign investment into Georgia in 2018.
- Foreign investors found the following sectors of Georgian economy most attractive in 2018:
- Financial sector – US$ 277.9 million, 22.5% of total investments;
- Transportation industry – US$ 209.9 million, 17%;
- Energy production and distribution – US$ 157.2 million, 12.8%;
- Manufacture of goods – US$ 142.3 million, 11.5%.
Compared to 2017, the total amount of foreign investment in Georgia was lower by one third in 2018. However, this reduction was not due to a slide in Georgian economy or a worsened business climate. The matter is that a large investment project – construction of Baku-Tbilisi-Erzurum gas pipeline – was completed in that year. Besides, a considerable number of foreign companies in the country changed ownership as they were acquired by Georgian citizens.
Four major types of legal entities can be established in Georgia. These are a limited liability company (LLC), a joint stock company (JSC), a general partnership (GP), and a limited partnership (LP). In addition to those, a cooperative can be registered or a sole proprietorship. Statistics show that the most popular of all types of company ownership in Georgia is LLC. Limited liability companies outdo other ownership types by far: nearly 98% of all currently registered business companies in Georgia are LLC’s.
The reasons why most business people choose this form of proprietorship are as follows:
- Both Georgian residents and non-residents can be constitutors of the company;
- There is no lower limit for the amount of registered capital;
- Small and medium-size manufacturing companies can count on tax reductions with this type of company ownership;
- The company financial liability is limited by its assets, and the constitutors share responsibilities in proportions to their shares of ownership.
Special statuses for companies registered in Georgia
A foreign investor can have a legal entity registered in Georgia under regular conditions. In this case, his or her company will conduct business in accordance with the relevant legislation, pay the taxes, and file the financial reports.
The Georgian fiscal system has been reformed recently, and the number of taxes has been reduced to six: five national taxes and one local tax. The Government has also borrowed an element of Estonian taxation model that allows avoiding the payment of income tax if the company re-invests the income into its own expansion and development. An international audit agency PricewaterhouseCoopers ranks Georgia 16th among all countries by the simplicity of its taxation system. A study conducted by a local agency shows that a business company has to spend 220 man-hours a year to meet all the tax report requirements, while the real sum of money that a taxpayer has to pay to the state amounts to 9.9% of his or her income.
What attracts investors from foreign countries to Georgia is its liberal and transparent taxation system, the simplicity of registering a business company there, and the ease of carrying out business operations in this country.
However, Georgian authorities are offering some tempting opportunities to increase the investment efficiency even further. This can be achieved by having the company registered in one of the Free Industrial Zones (FIZ), or otherwise, by obtaining the status of a Virtual Zone company.
The benefits of having a company registered in a Georgian Free Industrial Zone
To this moment, five FIZ have been established on Georgian soil. These are Tbilisi FIZ, Poti FIZ, Kutaisi FIZ, Hualing Kutaisi FIZ, and Kulevi FIZ. Company registration in one of these Zones brings the following benefits:
- Tax exemptions: no VAT (18%), no income tax (15%), no dividend tax (5%), nor property tax (1%) are payable in these Zones;
- No customs duties that vary from 0% to 12% for mainland companies are payable in FIZ;
- No financial reports are required;
- Lower cost of utilities such as gas, water, electricity because the utility providers do not pay the VAT;
- Availability of good infrastructure and services required for successful business operations on the territories of the FIZ. Office buildings, spacious warehouses, large parking lots, customs checkpoints operating round o’clock – everything is there. In addition, brokerage, security, loading-unloading and other services are provided in these FIZ;
- A company registered in a FIZ automatically acquires a legal address;
- All the FIZ are located in relative proximity to motor- and railroads, airports, and seaports, which allows saving on produce transportation;
- It is possible to make payments in any currency inside a FIZ, and there is no currency control there.
Indeed, a FIZ company will face very few limitations. Private individuals or legal entities, Georgians or foreigners can act as company constitutors. Manufacture, trade, services – all kinds of business activities are allowed provided that they are legal. One cannot manufacture and sell weapons and ammunition in the FIZ. Production of drugs and psychotropic substances as well as tobacco and other excise goods is also prohibited. A peculiarity of the FIZ is that there are no residential accommodations on their territories, and living in these Zones is not allowed. Everything else is.
The tax exemptions described above are effective on the condition that the FIZ company sells its produce (whatever it is) abroad, outside Georgia. Business transactions with Georgian resident companies and individuals are taxed 4%, and the VAT and income tax are also levied on such transactions.
A Georgian FIZ would be ideal for a large international company that wants to optimize its tax load and obtain duty-free access for its products to the markets of the countries that have signed free trade agreements with Georgia. Every FIZ has its own specialization and unique advantages. Thus, Tbilisi FIZ specializes in consumer goods production and IT business; Kutaisi and Hualing Kutaisi FIZ are primarily engaged in the processing of wood and stone; Kulevi FIZ companies are in the oil business; and Poti FIZ is located next to Georgia largest seaport.
Benefits of obtaining the status of a Virtual Zone person (or Virtual Zone company) in Georgia
Companies engaged in some kind of IT business are eligible for a Virtual Zone company status in Georgia. If the company develops software, does web design, or conducts research in information technologies, it is entitled to apply for this status. The Virtual Zone company status makes companies tax exempt from the VAT and income tax. They also do not have to pay customs duties when exporting their products from Georgia to other countries. They are only taxed 5% of the disinvested capital. Business transactions that such companies have with Georgian companies are taxed at regular rates.
Georgian government has created such beneficial conditions for IT companies with the goals, first, to attract more foreign investments to the country and, second, to facilitate progress in computer technology development in Georgia. The Virtual Zone company status comes with the corresponding certificate that is valid for one year and needs to be renewed afterwards. It takes the state authorities ten days from the application date to issue such a certificate. Two more days later the holder receives the certificate but only in an electronic form: the printed version of this sort of certificate simply does not exist.
Benefits of Virtual Zone person (company) status:
- Lesser tax burden;
- Possibility to work from one’s home country, without residing in, or even visiting Georgia;
- Lack of obligation to hire personnel.
Our prices for company registration in Georgia
The price of company registration depends, first of all, on the registration type:
- Standard – US$ 1,000;
- Virtual Zone status – US$ 1,500;
- Registration in a FIZ – US$ 2 000.
An additional US$ 500 is due if a legal entity is among the company constitutors. Furthermore, the new company constitutors have to cover the cost of opening a corporate bank account in Georgia. FIZ residents also have to purchase a license.
In the latter case, the company receives a legal address and one year of our services for no additional pay.
Why you should have your company registered in Georgia
Foreign business people choose Georgia as the country where they want to do business for the following reasons:
- The taxation system is plain and clear, and tax exemption schemes are available in this country;
- The process of company registration is fast and simple;
- There are no overwhelming requirements for establishing a legal entity in Georgia (no lower or higher limit on the registered capital, a foreign national can be a full owner of the company, and so on);
- There is a reliable banking system in Georgia;
- Georgia is not a member of the automatic information exchange group, nor has it declared its intention to become one;
- Internet banking is very well developed in this country, so foreigners’ bank accounts in Georgian banks can be easily accessed from their home countries or places of their residence;
- Issuing a power of attorney in the name of a trusted agent is enough to have a company registered and a bank account opened in Georgia without paying a personal visit to this country;
- Georgian bank officers sometimes speak English.
Company registration procedure in Georgia
You can have a legal entity registered in Georgia without even traveling to the country. Our company registration service is very popular with our clients as they enjoy establishing companies remotely simply issuing a notarized power of attorney.
To start business operations in Georgia, you should do the following:
- Contact us via e-mail firstname.lastname@example.org.
- Fill out a short questionnaire that will allow us to determine the services that your company needs, such as nominee service, legal or accounting support, opening a corporate or a personal bank account, etc.
- Cover the cost of the services against the invoice.
- After that, we will collect all the necessary documents and send them to you via e-mail.
- Then you will have to sign the company Charter and Memorandum and Articles of Association (that is, the company constitutive documents), issue a notarized power of attorney in the name of our representative in Georgia, and send it all to us via an international postage service.
- After receiving the documents, we initiate the company registration process.
- Then we open a corporate account for your company in one of the leading Georgian banks: Bank of Georgia, Silk Road Bank, or TeraBank.
When the company has been registered with the Georgian authorities and the bank account has been opened, you receive an extract from the Public Registry certifying your legal entity status, and the new company Charter and Memorandum and Articles of Association. If the company is registered in a Free Industrial Zone, you also receive the license. If it is a Virtual Zone company, you receive the corresponding electronic certificate.
Documents required for registration:
- Constitutors’ foreign passports and/ or company constitutive documents;
- Charter and Memorandum and Articles of Association of the new legal entity;
- Letter of Director appointment and his/ her written consent to take this position;
- A notarized power of attorney in the name of our company representative;
- Signature samples of company managers (for the bank).
A corporate bank account can be opened within one working day if it is a regular company. In case the company is registered in a FIZ, bank accounts are also opened swiftly but on the condition that at least one of the company constitutors is a Georgian citizen. If all the constitutors are foreign nationals, the process can last for up to one week. Having a company registered in a Virtual Zone takes thirteen working days. Such procrastination occurs because the process of the certificate issuance requires a considerable amount of time.
If you would like to have a company registered in Georgia (a regular company, a FIZ resident company, or a Virtual Zone company) or if you want to clarify any issue related to this, please write to us to email@example.com. We will answer all your questions and provide information pertaining to all the peculiarities of starting a company in Georgia. We will also be happy to assist you in collecting all the necessary constitutive documents and opening a bank account, so that you can launch your business in Georgia very soon and develop it to your entire satisfaction.