Accounting services in Georgia

Accounting services are in high demand among non-residents of Georgia. When one starts a business in a foreign jurisdiction, he or she may have trouble making sense of all the nuances of the local legislation especially without the knowledge of the Georgian language. At the same time, the effectiveness of the investments and the ability to carry out the intended actions are dependent upon the speed of adaptation to the Georgian business climate. Besides, a professional accountant’s support will allow the business person to avoid troubles that might occur due to failure to meet the tax payment or report submission deadlines, or to mistakes in the accounting statements. And of course, such support will shorten the time needed for establishing a business company.

The Georgian jurisdiction attracts many foreign business people, especially from the neighboring countries. They are lured by the simplicity of the company registration procedure, the lax bank regulations when it comes to opening a corporate account, by low commission fees on bank services, absence of lower limits for the amount of capital left on the account, and the high level of financial confidentiality available in Georgia. Over the recent years, quite a number of companies have moved their accounts from the Baltic States banks to Georgian banks as the former had to toughen their rules under the pressure of international financial organizations. Non-residents of the Baltic States often face refusals to open a bank account and account blocking without notice.

Our company specializes in accounting services for legal entities. We have vast experience in keeping the books for companies with different forms of proprietorship and we are very knowledgeable about the Georgian tax legislation. Our clients are happy to corroborate with us because we help them avoid many troubles and mistakes. Our skillful accountants will turn in all the necessary reports for you and pay all the taxes on time. Currently, it is a commonly accepted practice among international enterprises to hire accountants on outsourcing contracts as it helps save on salaries.

The price of our accounting services starts at 500 EUR a month and we have to receive a flat payment for six months. The ultimate cost of service depends on the individual characteristics of the company, the type of its business activity, form of ownership, and the number of bank transfers to be made each month. This is why our English-speaking accountant has to discuss with the client all the details pertaining to the fiscal side of the intended company activities at an early stage.  

Accounting services in Georgia

Legal entities in Georgia, like everywhere else, are supposed to periodically file the accounts. Failure to meet this requirement will result in fines and seizure of assets. The penalties include:

• A fine for tax payment delay – 0,05% a day of the amount of the tax unpaid;
• A fine for abusing  the procedure of registration with the tax authorities – 500 lari;
• A fine for untimely tax declaration – 5% of the tax to be declared;
• Understatement of the amount of taxes entails a fine of 10% of the understated sum, and tax evasion for the sum exceeding 100 000 lari is considered to be a criminal offence;
• Failure to submit tax and other fiscal reports will entail a 400-lari fine, and a repeated violation of this requirement – a 1000-lari fine.

The chance to get a tax penalty and spoil one’s reputation with the tax authorities and other state agencies is the main reason why it is so important to have a good accounting support for the business.

However, before we can provide the accounting services, you have to use other services that we offer. These include:

• Company registration;
• Drafting the constitutive documents;
• Opening a corporate bank account.

The accounting services that we provide to legal entities include the following:

• Development and implementation of the company accounting policy;
• Drawing up and filing tax and financial reports;
• Drawing up monthly, quarterly, and other periodic reports as well as reports on request;
• Employee salary calculation;
• Preparing and turning in the accounts to the fiscal and other regulatory agencies;
• Preparing the documents for banks and audit companies;
• Control of the dates, sums, and payments of the taxes;
• Making bank transfers from the corporate account;
• Instructions on the use of Internet banking, a personal Internet account in the tax bureau, and other inline instruments required for doing business in Georgia.

Our accounting services are accessible to those clients who have registered a legal entity in Georgia with our help. We do not provide accounting services to the companies that have been registered through other agencies.

Advantages of doing business in Georgia with respect to taxation

Having a commercial company in Georgia is beneficial from the taxation point of view for the following reasons:

• There is a simple and transparent taxation system in Georgia: only 5 national taxes a 1 local tax;
• There are tax exemptions for the companies registered in Free Industrial Zones (FIZ) or those having the status of a virtual company: such companies do not have to pay neither the income tax nor the VAT. Legal entities registered in a FIZ are also tax-exempt for dividends, and they do not have to keep account records;
• The cost of bank services is quite small;
• Free access of Georgian products (no import duties) to the markets of the EU countries, the UIS countries, China, Hong-Kong, Turkey, Ukraine, and also the EFTA countries (Switzerland, Lichtenstein, Norway, and Island);
• There exist state-run programs that support local producers. For instance, the “Manufacture in Georgia” program allows renting state assets for just 1 lari but on the condition that the renter meets his or her investment obligations;
• Georgia has signed agreements for avoidance of double taxation with 55 countries;
• Georgia is not a member country of the automatic financial data exchange group;
• The company registration procedure is simple and fast: there are no limits as to the amount of capital, foreigners can act as company constitutors, and the registration process can be completed within two days.

The latest “Doing Business” rating confirms the attractiveness of Georgia for business people. It boasts a high 6^th place there.

As far as the forms of ownership are concerned, the two most popular such forms are the limited liability and the individual entrepreneurship. As of February 1, 2019, the number of the former type of companies is 74 856 (41.44% of the total number of business companies in Georgia), and the number of the latter type of companies is 96 866 (53.63%). All other forms of proprietorship taken together constitute only 4.95% of the total number of companies.

Apart from choosing the most appropriate form of ownership, a non-resident should also take into consideration the possibility to register a company in a Free Industrial Zone or otherwise acquire the virtual legal entity status, as there are tax incentives for such companies.

Opening a corporate bank account

Every business company must have a corporate bank account. We recommend opening bank accounts with the following leading Georgian banks: Bank of Georgia, Silk Road Bank, and TeraBank. These financial institutions offer high quality bank services (such as payment and cash management, international pay cards, deposits, Letters of credit, bank guarantees, etc.) and they also have well-trained English-speaking personnel.

It is important to know that the Georgian banking system is stable and profitable. It is currently composed of 15 banks, 14 of which have foreign capital. Over the last year Georgian banks earned 914.7 million lari which is 5.1% more than in 2017.

Normally, opening a corporate bank account takes only 1 working day. However, if the company is registered in a FIZ zone the process can extend for weeks because the constitutors checking procedure has been seriously toughened recently. This process can be accelerated if there is at least one citizen of Georgia among the constitutors.

By the way, apart from standard services Georgian banks also offer premium service packages.

 Opening a personal account in the Bank of Georgia with the SOLO service package

Additional services that we provide

In addition to the accounting service, non-resident business people may be interested in the following services:

• Obtaining a license – it is required if you are planning to work in the medical sphere or other human protection areas, or otherwise you intend to use state resources or work in the area that concerns public or state interests;
• Nominee service;
• Apostilling of constitutive documents;
• Obtaining a tax residency certificate.

Accounting in Georgia

Legal entities registered in Georgia are supposed to keep the books. The Georgian legislation requires submission of the following declarations:

• Income tax report for the previous year has to be submitted before April 1 of the current year;
• Property tax report for the previous year has to be submitted before November 1 of the current year.
• The profit tax and the VAT tax reports for the previous month have to be submitted before the 15^th of the current month.

All the reports are filed through the virtual personal account that becomes accessible on the moment of the legal entity registration with the tax authorities. This account contains information about all the taxes payable, the tax calendar, and all the necessary form ready to be filled out.

To be able to submit the reports to the tax bureau on time we have to receive all the financial documents (such as invoices, contracts, bank statements, etc.) for the previous month before the 10^th of the current month. If we receive these documents later, we cannot guarantee their timely submission (that is, before the 15^th of the month) to the tax bureau.

In case we are unable to file the accounts on time due to late receipt, it is deemed the client’s fault and he or she is liable for the subsequent fine. In case late submission of reports occurs due to our fault, we will pay the subsequent fines for the client.

How to use the accounting support service in Georgia

If you are interested in registering a business company in Georgia and, besides that, obtaining the accounting support for it, please contact us via e-mail: [email protected]. We will ask you to fill in a small questionnaire for us to determine what services you require. You will be kindly asked to indicate the following:

• The desired type of company: standard, with registration in a FIZ zone or a virtual IT zone company (the latter option is available only to those legal entities who work in the IT sphere);
• Name of the company;
• Form of ownership: limited liability or joint stock;
• The language of the constitutive documents;
• Information about the constitutors and CEO’s: their names, addresses, passport details, contact numbers and e-mails, and their respective shares of capital;
• The official e-mail and telephone number of the CEO (or CEO’s);
• Main spheres of the prospective company business;
• Types of bank services the company intends to use.

Based on this information, we will compile a list of services required for starting a business in Georgia, and issue the invoices to you. Please bear in mind that six months of the accounting services have to be covered by a flat payment through a transfer to a Georgian bank. Payments for other services are to be made to a foreign bank in accordance with the invoices.

Documents required for provision of accounting services

Before we can start drafting the constitutive documents for you, you have to supply the following:

• Foreign passports of the constitutors and the CEO’s. If necessary, you can use our Nominee Director service;
• The constitutive documents of the existing company (this is in case this company is going to be the/ a constitutor of the new company in Georgia).

All the documents have to be scanned (please supply high quality images) and sent to our e-mail. This information will suffice to make up the constitutive documents for the company, have it registered, open a corporate bank account and start delivering the accounting services. In 90% of the cases, these operations do not require the client’s personal presence.

As our cooperation proceeds, we will ask you to supply scans of current financial documents before the 10^th of each month so that we can prepare and submit the monthly reports to the tax bureau before the 15^th on the month.

If you have any questions about out accounting services or about any other services that we provide, please do not hesitate to contact us via e-mail: [email protected]. We will be happy to assist you in effective organization of the work of your company in Georgia, to show you how to use Internet banking and other remote banking services, and take on the routine accounting so that you can have more time to handle some more important issues.