GEORGIA: a small Caucasian country with a big entrepreneurial potential
The sad truth is that there are few attractive locations where you could register a business company today. The US economy is certainly slower than it once was, and the EU countries bureaucracy can be overwhelming let alone their taxes.
No doubt, there are countries whose economies are developing at a faster pace, such as Turkey, India, and China, for example. However, private companies in these states have to deal with corrupted government officials, lack of infrastructure, and sudden changes in legislation.
Does that mean you can start a successful business nowhere in the whole world? No, that does not! Luckily, there are a few promising places that offer favorable conditions to enterprising entrepreneurs.
One such example is Georgia of the Caucuses.
Unlike many other former Soviet republics, Georgia has managed to overcome the hard times, and turned itself into a country with a vibrant economy. Its Free Economic Zones allow setting up a company of any size and ownership type and paying much less in taxes in comparison to most other states.
Georgia qualifies as a developing country, which means that it is hungry for foreign investments that would help its economy thrive. Understanding this need very well, the government passes regulations that would make Georgia as attractive to foreign investors as possible. Today setting up a business company is fast and simple, and doing business there can be lucrative indeed.
Georgia’s current business policies do yield good fruit. According to the World Bank surveys, it ranks 9th among all countries for the ease of doing business, and 6th for the ease of starting a company there.
Reasons why you should register a business company in Georgia
First of all, Georgia has a unique geographic position: it lies exactly between Europe and Asia thus linking these two continents. Not less important is the fact that Georgia has free trade agreements both with the UE and with China, which is a rare combination to be found in the modern world. Besides, it has made free and preferential trade agreement with more than 50 other countries, so it is a nice place to establish a company wherever you want to sell your produce to.
Some large international investors, such as Hualing Group of China, for example, are already making full use of Georgia’s liberal legislation. On an agreement with Georgian government, Hualing has established a Free Economic Zone where resident companies pay virtually no taxes at all. Chinese corporations are going to continue investing in Georgian economy as they intend to use the country for transition of their goods to European markets.
In addition to that, Georgian banking, real estate, and tourist industries are vibrantly developing and quickly approaching the highest standards. This country is attracting more and more forward-thinking entrepreneurs from all over the globe.
Types of business proprietorship available in Georgia
Georgian Law on Entrepreneurs regulates the company establishment process. Since 1994 when the law was passed, it has seen quite a number of amendments. All of these amendments has served the purpose of lessening the administrative routine and facilitating company registration for both Georgians and foreigners. According to the Law on Entrepreneurs, the following forms of company ownership are permitted in Georgia:
- Sole Proprietorship
- Limited Liability Company
- Joint Stock Company
- General Partnership
- Limited Partnership
- Joint Venture
- Branch Office
Each form of ownership has its own advantages and disadvantages, and you can choose whichever suits you best. A sole proprietorship, for example, is the easiest to register but if a sole proprietor needs a bank loan, he or she will have to have some real estate in Georgia. A limited liability company (LLC) is the most popular form of ownership among foreign business people.
Both private individuals and legal entities can establish an LLC in Tbilisi or any other Georgian city. In the case of a private individual registering an LLC, only the very basic documents are required: the application, the passport, and the receipt evidencing payment of the service fee. (The fee is around US$40, which is certainly not too much.) If it is a foreign business company wishing to establish an LLC in Georgia, the company statutory documents, such as home country registration details, Company Charter, Board of Directors details, etc. need to be provided as well. If you want to establish a joint venture with a Georgian company, no registration is required at all. Our lawyers will provide professional consultations on any legal and administrative issues pertaining to incorporating a company in Georgia. Please contact us via email email@example.com and we will gladly advise you on the pluses and minuses of each type of proprietorship and assist you in starting a business in Georgia.
The procedure of having a business company registered in Georgia
Not only the registration costs are low, but the process of registering a company in Georgia is also plain and swift, especially if you know how it works. Besides, there are a few pleasant features that are rarely found in other states. Here are some of them:
- The company is registered simultaneously for administrative and tax purposes. Thus you receive a registration certificate and an individual tax number on the same visit to the agency (see below);
- There is no registered capital requirement.
- The Company Charter or Articles of Incorporation do not have to be written in Georgian: any national language is acceptable.
If you choose Georgia to be the country of your business and tax residence, you will find that establishing a company there is a piece of cake. At the same time, it is a good idea to have a reliable contact in the country who could help you with the registration. All the conversations with the authorities have to be in Georgian, so you will be advised to have at least a translator, or better still, a Georgian lawyer who speaks your language.
The first thing to do when registering a company in Georgia is pay the competitively priced registration fee. Then you have to pay a visit to the National Agency of the Public Registry – that is where they keep record of all companies in Georgia. There you will have to submit the application and all the other necessary documents that need to be notarized and apostilled in case they were issued outside Georgia. You will also have to acquire a legal address in this country and bring the document that confirms it to the Public Registry. In case you are hiring a Georgian director to be your representative in the country, his or her written consent also has to be submitted to the Agency. (Well, registering a company in Georgia is easy indeed, but it is not done at a snap anyway). And of course, do bring the bank receipt evidencing payment of the service fee!
If you want to register a branch of your company in Georgia, the process is going to be a little more complicated. You will have to submit all the statutory documents of the parent company, and those also need to be translated, notarized, and apostilled.
We can tackle all these administrative issues for you. In fact, you will not even have to come to Georgia for your company registration. With our assistance, it can be done remotely.
One more thing to do to let your newly established company start operation is open a corporate bank account in one of the Georgian banks. A business company is inexistent without a bank account, but banking services in this country are truly exceptional. It would be safe to claim that no other former Soviet republic can offer bank services of such high quality.
Taxes in Georgia: a lesser burden
Georgian tax system is transparent and the taxes are generally lower than in most European countries. The following are the main taxes in Georgia:
- Income tax – 20%, flat
- Corporate tax – 15%
- Dividend and interest tax – 5%
- Property tax – 1%
All of these taxes are lifted if you register a company in one of the Georgian Free Economic Zones. We will be happy to assist you in finding the most appropriate tax jurisdiction for your company. Please write to us to firstname.lastname@example.org and our skilled accountants will consult you on any tax-related issues.
Other factors to consider when contemplating a business venture in Georgia
Even though no registered capital for a company is required in Georgia, having a legal address is necessary. Thus, when registering you will have to submit a document confirming the physical presence of your company on Georgian soil. This will have to be a real estate purchase agreement or a rent agreement otherwise.
A nice thing to know about Georgia is that foreigners have equal property rights with locals, which means no additional hassle when buying or leasing property in the country. When registering a purchased or rented piece of property with the authorities you only have to provide your identification document (i.e. your foreign passport) and a notarized copy of the purchase/ rent agreement. Some supplementary documentation may also be required in some cases.
If you think that Georgia is the country where you would like to start a business, our company will provide all the assistance necessary in the process. Please contacts us via e-mail email@example.com and we will advise you on company registration, subsequent legal and accounting support, and all other issues related to doing business in Georgia – a small country with a big potential.