Jun 14, 2019

Company registration in Georgia (Poti Free Industrial Zone) – starting from 2000 USD

The price of the service starts at US$ 2,000

A business company registered in Poti Free Industrial Zone (FIZ) can significantly lessen its tax burden. Besides, all the facilities needed for effective business operation are available in this Zone. There are office buildings, warehouses, parking lots, and the utilities are provided too. And Poti FIZ has one outstanding advantage over other Georgian Free Zones: it is located right at the largest seaport in the country, Georgia’s gateway to Europe. In addition to this, company registration in this FIZ should be enticing for those manufacturers who seek access to international markets. Goods produced on Georgian territory (and a Free Industrial Zone in Georgia is not an offshore zone) can receive the “Made in Georgia” label that allows exporting these goods duty-free to the EU and CIS countries, and also to China and Turkey, as Georgia has free trade agreements with all of these coutries.

Registering a company in Poti FIZ, a non-resident entrepreneur can acquire a powerful business instrument. Full infrastructure, low cost of energy and other utilities, close proximity to international transportation routes, and almost complete absence of taxes – all these factors are bound make a business operating in Poti FIZ highly profitable.

We have registered business companies in Georgian Free Industrial Zones, including the one in Poti, for dozens of international clients. We have skilled lawyers on our stuff who know the Georgian legislation from A to Z and are aware of the local ways of doing things. This knowledge lets us easily overcome all the bureaucratic barriers and deliver the new company documents to the client only after a couple of days. Without the knowledge of local legislation and the Georgian language it would be quite difficult to establish a company in this country. At the very least, it would take a long time. We charge US$ 2,000 for having a business company registered in this tax haven, and US$ 500 more if one (or several) of the company constitutors is a legal entity. Another cost to be borne in mind is the price of the license that you will have to buy from the FIZ administration. This price starts at US$ 4,000 per year.

If you find this offer attractive, we will take only two working days to have a company established in Poti FIZ on your behalf. After two days you will have all the constitutive documents and the Poti FIZ license of your choice.

Some specifics of Poti FIZ in Georgia

The Georgian Government Decree №72 from April 14, 2009 established Poti Free Industrial Zone. A bit more than 3,000,000 square meters (3,587,000 sq. yards) of the seaport territory were allocated to the Zone for the period of 99 years. The rights of the Zone Administrator were given to Rakia Georgia, a company residing in United Arab Emirates. It undertook to prepare all the necessary infrastructure for prospective investors: fence the area, bring in the utilities, pave the roads, build customs checkpoints and provide the computer and other equipment required for their operations.

Rakia Georgia made a 49 year lease agreement for the Zone with the Georgian government. However, the company proved unable to meet its investment obligations. Thus, instead of levying any penalties on Rakia, in 2016 the Government decided to reclaim 85% of the FIZ shares from the Arab company. In the fall of 2017, 75% of these shares were sold to China Energy Company, Ltd. for US$ 10 million. In addition to this sum the Chinese company promised to invest another US$ 150 million into the development of this FIZ.

As of 2019, the Poti FIZ ownership structure is as follows:

  • 75% belongs to China Energy Company, Ltd.;
  • 10% belongs to the Government of Georgia;
  • 15% belongs to Rakia Georgia.

FIZ Poti has been in operation since 2010. This Zone attracts, first of all, international transport companies who need large warehouses located near major transportation routes. Apart from those, there are manufacturers of automobile spare parts, consumer goods, household appliances, and construction materials. The largest companies operating in Poti FIZ are CMT, Ltd. (bulk cargo storage), American Monolith, Ltd. (frozen food storage), Peis Warehousing Georgia, Ltd. and Iceberg Poti, Ltd. (both processing seafood). In total over 100 companies from the following countries are residents of this tax haven: Armenia, Azerbaijan, Ukraine, Turkey, and India. They also produce high quality roof materials, air fresheners, lubricants, and a number of other things.

Resident companies can avail themselves of dry or cold storage warehouses, transport terminals, and office buildings. There are railway tracks that come into the Zone, however, they are quite short and can accept trains of five cars maximum plus the engine.

The business attractiveness of Poti FIZ is going to grow in the near future as Pace Group, a Georgian-American company, is planning to build a deep-water terminal there. This terminal will be able to accept ships with fifty to sixty thousand tons of cargo carrying capacity. The quayside is going to be 650 meters (710 yards) long, and the dock capacity of the new terminal will be 100,000 TEU. The total project investment amounts to approximately US$ 120 million.

Advantages of having a business company registered in Poti FIZ

The central inviting characteristic that Poti FIZ has for investors is its taxation system. Companies registered in this Zone do not have to pay the following Georgian taxes:

  • 18% VAT;
  • 15% income tax;
  • 5% dividend tax;
  • 1% property tax.

Mainland companies in Georgia also have to pay customs duties of up to 12% while Poti FIZ residents are exempted from this payment too.

There are other advantages this Zone has in addition to tax benefits. These are as follows:

  • There is no need to file financial reports;
  • There is no obligation for a resident company to hire employees;
  • The salaried employees declare their income by themselves and pay their own income tax;
  • Any form of ownership is acceptable in the Zone (even though a Limited Liability Company is the preferred type of ownership there);
  • There are no requirements as to the amount of registered capital;
  • Any person or legal entity can be the company constitutor(s) – Georgian citizens (resident companies) or foreigners;
  • Manufacturers can obtain a “Made in Georgia” certificate and thus export their produce to the EU and the CIS countries, as well as China and Turkey without paying customs duties;
  • There is a well-developed infrastructure in this FIZ, with direct access to a large seaport, motor- and railroads; Kutaisi and Batumi airports are also relatively close – 80 kilometers (50 miles) and 90 kilometers (56 miles) away respectively;
  • There are two customs checkpoints in the Zone open 24/7;
  • There are warehouses 241 to 608 square meters (288 to 727 yards) in size equipped with fire alarms;
  • There is round o’clock security video surveillance there;
  • Unfurnished offices 44 to 100 square meters (53 to 120 sq. yards) in size are available;
  • For an extra pay, secretary, translation, and cleaning services are provided;
  • Brokerage and loading-unloading services are also available;
  • The resident companies are allowed to alter the shape of their land lots;
  • Prices for electricity and other utilities are comparatively lower in Poti FIZ;
  • There is Inexpensive labor force there;
  • There is also low cost, food, clothing, and rent;
  • A free legal address is provided to any company registered in this Zone.

The costs of having a company registered in Poti FIZ, Georgia

A non-resident of Georgia can have a business company registered in Poti FIZ both personally, and via a trusted agent who holds a power of attorney. Company registration in this FIZ entails the following costs:

  • Drafting the constitutive documents, registering the company with the Georgian Public Registry, and negotiating the residence conditions with the FIZ administration – US$ 2,000 (single flat payment). An additional US$ 500 is due in case a legal entity is listed among the company constitutors;
  • Every business company operating in Poti FIZ has to buy a license. License prices vary. For example, a special license for trading one type of products costs US$ 4,000 a year, and a general license for trading several types of products costs US$ 8,000;
  • Opening an account in one of the leading Georgian banks – US$ 1,500 (a single flat payment).

The rent prices should also be taken into consideration:

  • The rent of one square meter (1.2 sq. yards) of warehouse space is US$ 75 per year;
  • The rent of one square meter of land is US$ 7 per year. This is a good price and it allows renting land lots for an extended period of time and building the necessary constructions on them. Besides, the building company services are less expensive on the FIZ territory because, like everyone else there, the builders are VAT exempt.

The tax exemptions that the Zone offers only hold if the resident company sells its produce (whatever that may be) to foreign countries, that is, outside Georgia. Deals with Georgian resident companies and individuals are taxed 4% of the contract price.

If you intend to hire local residents, you have to know that the pension reform that started January 1, 2019 in Georgia requires that the employer remit 2% of the employee salary to the pension fund. At the same time, no minimum payment requirement is specified in Georgian legislation.

The company incorporation procedure in Georgia  – in Poti FIZ

Ninety percent of our clients want to save their time and effort by issuing a power of attorney in the name of our Georgian representative who will register a company on their behalf in Poti FIZ. In this way they can carry on with their usual business and after only a few days have a fully operable company in a tax-free zone. The registration procedure can be provisionally divided into the following steps:

  1. You contact us via e-mail: [email protected].
  2. We ask you to fill out a short form to define your needs. There you have to provide the details for your future company: indicate its name, the type of the intended business activities, the desired type of ownership (Limited Liability, Joint Stock, etc.), the constitutors’ and the directors’ details, your contact information, etc.
  3. Based on this information, we suggest a series of services that you may require.
  4. When the list of services has been agreed upon, you have to cover their cost against our invoice.
  5. Our lawyer drafts the power of attorney and with your approval of its wording sends it to you for signing.
  6. You sign the power of attorney, have it notarized, and send it back to us with an international postage service.
  7. Our lawyers draft the company constitutive documents (in English) and send them to you for endorsement.
  8. When these documents are ready, we register the new company with the Georgian Public Registry of commercial and non-commercial organizations.
  9. We fill out the Poti FIZ residence application form on your behalf and reach an agreement with the Zone administration on the conditions of your residency.
  10. You cover the cost of the FIZ license.

When you obtain the license, the only thing to do is to open a corporate bank account for your new company.  When the registration procedure is complete you will receive the following documents: the company Charter, the Memorandum and Articles of Association, an extract from the Registry, and the FIZ license.

Documents required for company registration in Poti FIZ, Georgia

The number of documents depends on the legal nature of the company constituent.

  • If you are a private individual constituting the company, all you have to submit is a copy of your foreign passport;
  • If the constitutor of the new company is a legal entity, you have to provide us with your company Charter, the Memorandum and Articles of Association, an extract from the home country Registry, and company managers’ and shareholders’ details.

Having a company established in a tax haven is a powerful commercial instrument, especially for international businesses. Poti FIZ is preferential in terms of its location, low price for the rent of land, and the availability of land lots where you can put your buildings. As far as warehousing in this FIZ is concerned, the demand for it exceeds the supply, so you might have to wait a while until a warehouse becomes vacant, or build your own warehouse instead.

If you have any questions regarding company registration in Poti FIZ or if you have already decided to establish a business near the largest Georgian seaport, please contact us at: [email protected]. After we receive the full set of documents from you, it will take us no more than two working days to deal with all the registration red tape, and we will deliver to you all the papers that certify your ownership of a tax-exempt company in Georgia.