Registration of a company in the Free Industrial Zone Poti

The free industrial zone Poti allows significantly reducing costs of business due to less tax burden. Moreover, the zone provides all the conditions for effective operation, with the entire necessary infrastructure: warehouses, offices, land areas, and communications. And of course, the greatest benefit of FIZ Poti is the presence of a big sea port, which is the Georgia’s gate to Europe. The free industrial zone Poti is attractive for manufacturers who wish to enter global markets. The available certificate of Georgian origin of goods allows duty-free import of goods in territories of EU countries, China, Turkey, and CIS.

By registering a company in the FIZ Poti, non-residents obtain an effective instrument for doing business. Virtually no taxes, complete infrastructure, low prices for electric energy and other utilities, and proximity to international transit channels makes registration of a legal entity in the Free industrial zone Poti very lucrative.

We have a vast experience of registering companies in Free industrial zones, including Poti. Owing a qualified staff of lawyers, who are fully aware of the legislation peculiarities and local peculiarities of business, we may easily deal with bureaucratic procedures. In just a few days we provide our clients with a complete set of documents for a new legal entity. Without command of Georgian language and the local legislation, it is very complicated to register a company, and the process itself takes more time. The cost of registration of a new legal entity in the zone of tax haven makes 3800 EUR; if participants are not only natural persons but legal entities as well, the cost increases for 1000 EUR. Increased price is explained by more complicated procedures of registration, when legal entities are among founders of a company. One should keep in mind that operation in the territory of FIZ requires obtaining a license at the zone administrator. The price of the license starts from 4 000 USD.

We provide prompt service, and already in 2 days we deliver to our clients all the constitutive documents for a new company with a license for operation in the FIZ Poti.

Peculiarities of the Free industrial zone Poti

The Free industrial zone Poti was established by the Decree of the Government of Georgia №72 dated 14.04.2009 in the territory of a sea port, with term of validity 99 years and area of 3 046 037 sq.m. The powers of the zone administrator were given to the Arab company Rakia Georgia. The company undertook to prepare the entire infrastructure for potential investors: fence the territory, lay the utilities, asphalt roads, build and equip points of customs control, and provide them with computer equipment.

Rakia Georgia obtained FIZ for rent for the period of 49 years. But the Arab company failed to fulfill its investment obligations, and in 2016 the Government of Georgia decided not to apply penalty sanctions to Rakia Georgia, but to take back 85% of share FIZ. In autumn of 2017, 75% share in the Free industrial zone Poti was purchased by the company China Energy Company Limited for 10 million USD. The Chinese company also promised to invest in the development of the zone 150 million USD.

As of the beginning of 2019, the structure of owners of the Free industrial zone Poti is:

• 75% owned by CEFL Euro-Asia (China);
• 10% — Government of Georgia;
• 15% — Rakia Georgia (is under ownership of the governmental entity of the Emirate Ras al-Khaimah).

FIZ Poti has been fully operating since 2010. Above all, services of a free zone are demanded by transit companies that are interested in rent of big warehouses along major transport corridors. Also, in the territory of the privileged zone there are companies that deal with manufacture of automobile spares, goods of mass consumption, household equipment, and building materials. The biggest companies operating in the territory of the Free industrial zone — CMT LLC (storage of bulk cargo), American Monolith LLC (storage of frozen goods), Peis Warehousing Georgia LLC, Iceberg Poti LLC (processing of fish products). In the territory of beneficial zone more than 100 companies from the following countries operate: Ukraine, Azerbaijan, Turkey, Armenia, India. This also is the place of production of qualitative roof materials, lubricants, and packing for air fresheners.

In FIZ Poti, investors can use warehouses (for dry or cold storage), terminals, and office premises. In the territory of the beneficial zone, there are also railroad tracks, but it should be remembered that FIZ Poti can accept trains from maximum 5 cargo wagons and a locomotive.

Investment attractiveness of the Free industrial zone Poti will soon increase. The American-Georgian company Pace Group plans to start here construction of a deep water terminal that will be able to let ships with capacity 50-60 thousand tons. The total length of quays of the new terminal will make 650 m, and its carrying capacity – 100 thous. TEU. It is planned to invest around 120 mln. USD in the project.

Benefits or registration of a company in the Free industrial zone Poti

The Free industrial zone Poti is attractive for investors who wish to start a company with a low level of taxation. Legal entities registered in the FIZ are exempted from payment of taxes:

• on income – 15%;
• VAT – 18%;
• on dividends – 5%;
• on property – 1%.

As well as customs duties in amount of 5% or 12%. Beside tax benefits, companies registered in the FIZ Poti have these privileges:

• no need in financial reporting;
• no obligation to hire employees;
• payment of the income tax is controlled and performed by employees themselves, they also submit declarations to the tax department;
• no requirements to the type of ownership of the company (but is typically registered in the form of LLC, OOO) and to the amount of the authorized capital;
• founders of the company can be as residents, so as non-residents, as natural persons, so as legal entities;
• manufacturers can issue a certificate of origin and supply their products to EU countries, CIS, China, and Turkey to avoid customs duties;
• developed infrastructure, direct access to a big sea port, rail road and highway, relatively small distance to airports in Kutaisi (80 km) and Batumi (90 km),two customs points operating 24/7;
• warehouses with an area 241 to 608 sq.m., which are equipped with fire alarms, also the territory FIZ Poti has a 24-hour security, and a video surveillance;
• non-furnished offices with an area 44 to 100 sq.m. For extra price, services of secretary, translator are provided, as well as cleaning of premises;
• in the territory FIZ broker and cargo services and provided; it is allowed to change the form of the land area;
• low cost of electric energy and public utilities;
• cheap manpower, low cost of rent, food, clothes;
• legal address for registration is provided for free.

Remote registration of a full-scale IT company in Georgia

Expenses for registration of a company in the FIZ Poti

In Poti, non-residents can register a company as personally, so as through a representative under a power of attorney. The procedure of registration of a legal entity in the FIZ Poti presumes the following expenses:

• preparing of constitutive documents, registration of a company in the public Register, negotiations with the administrator of the FIZ – 3800 EUR (one-time). The price increases for 1000 EUR if legal entities are among founders of a new company;
• purchasing the license. To operate in the territory FIZ Poti, the license for 1 year should be purchased. Its cost depends on the type; thus, a special trade license for 1 type of goods or services costs 4 000 USD, a general license for two or more types of goods/services – 8 000 USD;
• opening a bank account in the leading Georgian bank – 2900 EUR (one-time).

Besides the mentioned expenses, the cost of rent should be accounted:

• warehousing premises – 75 USD per 1 sq.m. yearly, but these are rare because of the great demand;
• land area — 7 USD per 1 sq.m. yearly. The price is very attractive and allows renting the land for a long-term period and to build here necessary structures for business. It should be noted that building companies, which services due to the absent VAT will be cheaper, are located in the territory FIZ.

Companies in FIZ are exempted from payment of taxes, but only provided that they realize products outside the country. Trade deals with residents of Georgia are imposed with 4%  tax on the invoiced price of goods.

When hiring citizens of Georgia as employees, it should be remembered that from 1 January 2019 a pension reformation had started in the country, and employers must periodically top up a special pension account with 2% of salary. The minimum amount of salary in Georgia is not defined by the law.

Income tax in Georgia

Process of registration of a company in the FIZ Poti

In actual practice, 90% of clients are interested in remote registration of a company in the FIZ Poti using a representative with a power of attorney. Therefore, they may proceed their business and just a few days after obtain a tax-free company in Georgia. The registration process itself can be divided into the following stages:

1. Client addresses us via e-mail: [email protected].
2. To define the client’s needs, we ask to complete a short questionnaire. You need to state all the required details of a further company: name, language of constitutive documents, planned type of activity, type of company (AO, OOO), participants of company (natural persons or legal entities), information on its directors, contact details, main customers and suppliers.
3. Based on the obtained information, we make a list of potential services and agree it with the client.
4. Client pays for our services according to the invoice.
5. Our lawyer agrees the text of the power of attorney and delivers to the client for signing.
6. Client notarizes the power of attorney and delivers it us in Georgia with international shipping service.
7. Our lawyers prepare constitutive documents for a new company (in Russian or English language) and register a company in the Public Register of proprietors and non-commercial legal entities.
8. We complete a client’s questionnaire for the administrator of FIZ Tbilisi and agree upon cooperation.
9. Client pays the price of the license.

Upon payment of the license, the client may fully operate in the FIZ Poti. Still, it is also recommended to open a corporate bank account. Upon finishing the procedure of registration in the FIZ Poti, we provide a client: by-law, protocol of meetings, extract from the public register, and license for operation in the free zone.

Corporate bank account in Georgia in the Bank of Georgia with personal visit

Documents necessary for registration in the FIZ Poti

List of documents necessary for registration in the FIZ Poti depends on the type of founders of a new company:

• natural persons provide international passports;
• legal entities must provide: by-law, protocol of meetings, extract from their registers of legal entities, and information on directors and participants.

A company in the Free industrial zone Poti is an effective instrument for international business. This FIZ has an advantage among others by its area, therefore, rent of land is relatively cheap, and structures necessary for operation can be built here. Regarding warehouses for storage in the beneficial zone, these are in great demand, so client will probably have to wait some time for this service.

If you have questions on registration of a company in the FIZ Poti or have already decided to open your business in the biggest sea port of Georgia, contact us right now at: [email protected]. In just two working days, having obtained a complete set of documents from you, we will register a company and provide you with all the verifying documents.