Incorporating a company in Georgia in 2020: anti-crisis advantages offered by the jurisdiction

Thanks to successful outcome of conducted reforms, Georgia was able to set up excellent conditions for doing business, including foreign businesses. Large number of companies here are registered by citizens of Russia, Ukraine, Turkey, Armenia, Iran, since the conditions for export activities in Georgia are considered the best in the Black Sea region. In addition, the country’s successes were marked at the international level: for two consecutive years, Georgia has been included in the TOP 10 Doing Business ranking (7th position in 2020 from among 195 countries). No wonder, as the country has one of the best tax systems in the world, a low level of corruption and free access to international markets.

Attention!!! For registration of business in Georgia, as well as opening accounts, including remotely contact us by mail: [email protected] or online chat and we will reply you as soon as possible. 

How can Georgian jurisdiction provide benefits for investors from the CIS countries, Ukraine, the EU:

• tax optimization – in the Free Industrial Zones of Georgia (FIZ) with almost zero fiscal burden; 
• lack of currency control and low bank fees;
• high level of confidentiality – Georgia does not exchange financial information within the framework of CRS;
• remote registration of companies and opening accounts (including without substance);
• the presence of developed systems of remote access to bank accounts (online banking ).

It is possible to register a company in Georgia in a tax-free zone and a bank account remotely, without a real presence, only with the help of the Offshore Pro Group. We will help you make your business succeed.

Open a company in Georgia: choice of legal form

According to Sakstat, 180,171 active business entities and other companies were registered in Georgia as of January 1, 2020.

Most of them are private entrepreneurs (94,494 units), their share in the total number of businesses is 52.4%.

Limited liability companies come second in popularity. At the beginning of the year, their number in Georgia reached 76,838 units (42.6%). non-commercial individuals close the list of top three leaders – as of 01.01.2020, there were 3,761 of such entities in operation (2%).

The gap between 2nd and 3rd place is huge. This is due to the fact that private entrepreneurs and limited liability companies are the most optimal organizational forms for doing business in Georgia.

It should be noted that the number of business entities with completely foreign participation increased during the second half of 2019. As of 01.06.2019 their number was 8,710, whereas as of 01.01.2020 it was 9 346 (+ 7.3% increase). The number of companies with mixed ownership also increased – from 2,714 to 2,836 (+ 4.5% increase). Such a constant growth of foreign or partially foreign companies indicates the presence of interest among non-residents in Georgian jurisdiction.

Features of doing business in Georgia as a private entrepreneur

Private entrepreneur is the most popular form of business organization in Georgia. Individuals, including non-resident individuals, as well as stateless persons, can register as private entrepreneurs.

As in Russia or Ukraine, private entrepreneurs in Georgia bear full responsibility with their property for fulfilling their obligations.

There are no particular restrictions on types of activities for private entrepreneurs in Georgia, however they should not conduct the following activities:

• medical, architectural, scientific, medical, lawyer’s activities;
• operate in areas that envisage licensing;
• engage in the production of tobacco, alcohol or other excisable goods;
• provide financial services;
• carry out currency transactions;
• organize gambling games;
• engage in recruiting.

In all other sectors of the economy there are no restrictions for private entrepreneurs to operate.

A large number of individual entrepreneurs in Georgia are associated with a favorable tax regime. Almost all of them belong to the category of small businesses that pay only income tax in the amount of:

• 1% – when the annual revenue is less than GEL 500,000;
• 3% – when the annual income is more than 500 000 GEL.

Also, private entrepreneurs can be VAT payers (18%), but only on the  condition that the annual income from economic activity exceeds 100,000 GEL.

Registration of LLC in Georgia: key features

An LLC in Georgia, just like in Russia or Ukraine, is created by legal and / or individuals, where each participant is responsible for fulfilling the company’s obligations with its capital contributions. In turn, the obligations of a limited liability company to creditors are limited to the property of the LLC.

There is no requirement for minimum and maximum authorized capital established by law for an LLC in Georgia. Therefore, here you can open a company with a capital of as low as 1 lari.

Standard taxation of a limited liability company:

• Corporate tax on profit – 15%;
• VAT – 18%;
• tax to property – up to 1%;
• tax on imports – up to 12%;
• excise tax.

It should be noted here that corporate profit tax is withheld only when shareholders distribute profits. If, however, the profit is reinvested in the enterprise, then the tax is not paid. The so-called “Estonian” taxation model began to function in Georgia in 2017, its main goal is to motivate businessmen to invest in company development.

Learn more about taxation of legal entities in Georgia. 

It is the simplicity of doing business and the absence of restrictions that attract both residents and non-residents in the form of LLCs.

But this is far from being the exhaustive list of benefits that the Georgian jurisdiction can provide to non-residents. Very great prospects open up if you register a company in Georgia in one of the FIZs.

Opening a company in the FIZ in Georgia is the most optimal method for cost optimization

Four FIZs have been created and are fully operational in Georgia: Tbilisi, Kutaisi, Kutaisi- Hauling and Poti. Companies, that are registered in these free zones, get a lot of advantages:

• almost complete absence of tax burden on export revenue;
• fully prepared infrastructure for doing business;
• lack of currency control and restrictions on international payments;
• low cost of electricity, utilities and other services;
• cheap labor and open access to international markets;
• lack of export-import duties;
• there are no restrictions on the repatriation of profit (moving capital abroad);
• lack of taxation of dividends;
• Good location at the crossroads of trade routes between Europe and Asia and reduced logistics costs.

By opening a company in Georgia in the FIZ, a non-resident gets the opportunity to reduce fiscal, utilities, banking, logistics costs, as well as labor costs, which increases business efficiency and is especially important in times of crisis when cost reduction becomes an imperative.

We will help to register a company in Georgia in an FIZ with a bank account remotely, which will allow you to redirect cash flows through jurisdictions with virtually zero taxation and high confidentiality. Georgia is not a member of CRS and does not plan to sign an agreement on the exchange of financial information in the near future.

For more information and ordering the service, please email: [email protected] and we will contact you as soon as possible.