Georgia Tax Jurisdiction and Ease of Doing Business

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Georgia Tax Jurisdiction and Ease of Doing Business

Georgia Tax Jurisdiction and Ease of Doing Business

Georgia Tax Jurisdiction and Ease of Doing Business
Georgia Tax Jurisdiction and Ease of Doing Business

Georgia, the country straddling the pivotal Caucasus divide between Europe and Asia, has come a long way from the near-failed state it was in 2003. The country, with the city of Tbilisi as its capital, is a modest parliamentary democracy bordered by powerhouses like Russia and Turkey and inhabited by over 3 million people.

Georgia is arguably Europe’s most exciting investment and trade prospect. Post-soviet instability and conflict has given way to stable politics, progressive reforms, and a capital friendly outlook, thanks to strong institutional arrangements and innovative policies.

For the country, this transformation has largely driven astounding growth and increased patronage. The resulting influx of foreign investment has further helped to secure a proven reputation for opportunity and ease. With its strategic location, relaxed tax regime, and laidback rules on starting a business, Georgia is currently the jurisdiction of choice for investors on the search for their golden goose – or a haven to tend it.

Europe’s newest commercial paradise

Investors are welcome to Nirvana, literally. The impressive climate, cuisine, and healthcare are but few of the many qualities that set this country apart from the rest. Georgia’s many reforms have helped to establish its efficient and innovative government, infrastructure, insurance, and transportation. Perhaps more of note, is that it is situated very conveniently for Europeans.

Unlike its abstract religious variants, this paradise operates an open immigration policy. In fact, emigrating to Georgia is almost effortless. The country is visited yearly by a number of visitors that is almost double its population. Most of these visitors are entrepreneurs and investors seeking to exploit its many foreign investment opportunities.

It remains the only country that grants to visiting nationals from up to 94 other countries an initial residence right of 365 days without a visa. It does, however, prefer that these nationals enter legally, upon which they may stay and do as they wish—be that for business or pleasure.

Favorable Business Climate

Georgia’s business climate currently outranks, in several metrics, reputed haven countries like Switzerland, Republic of Korea, Sweden, Macedonia, Finland and Australia.

The country was, in 2018, rated the strongest and most stable compared to others in the region; and marked improvements in governance and business along with progressive reforms across all sectors continue to be great indicators for the long-term.

It was also ranked 24th by the World Bank in the “ease of doing business” category, and 6th for the “best place to start a business.” Ranked 16th in the world, Georgia also offers a high degree of financial and economic freedom for companies seeking to do business. Decisive governmental action continues to keep corruption minimal and low-level, and demands for bribes are not a common occurrence.

The many liberalized policies and improvements in business environments make it possible to get a business up and running in Georgia in as little as two days. There are deep reserves of labour. Little or no capital is needed, and there are no restrictions on the number of foreign shareholders or directors.

There are no minimum or maximum capital requirements for companies. No such requirements exist for non-resident foreigners seeking to open a bank account either, and the requirement to do so in person can be fulfilled through an agent. Though non-residents are required by law to have a local Georgian company open a corporate bank account on their behalf, there is usually no bottleneck thanks to the simple and expedient procedure.

Also, companies do not need to pay registration maintenance fees, and there are no specific registration and licensing requirements for foreign investment other than those that apply to all companies. Companies situated in any of the country’s Free Industrial Zones can enjoy extensive tax exemptions. Georgia has ongoing free trade agreements with the EFTA countries.

With its free trade agreement with China, Georgia also offers a great incentive for companies seeking inroads into Asian economies. An added advantage is that this does not preclude trade with the rest of the EU—custom free access and close proximity to the EU ensure the permeation of European trade and investment.

Of note also is the fact that there is no specific policy by the Georgian government that restricts domestic investors from investing abroad or in foreign ventures.

Liberal Tax Regime

If one thing is clear already, it is the Georgian government’s commitment to transparency and simplicity of regulation. One way it distinctively honours that commitment is through its radically liberal tax regime.

Georgia is a low-tax and territorial taxation jurisdiction. That means first that you hardly pay any taxes, especially if you have acquired Georgian residency and obtained tax liability. Secondly, it means that foreign Personal Income (PIT) is not taxed beyond income that comes earned within the country itself. Tax obligation is linked to residence—only one stay is enough to obtain tax residency.

Corporate Income Tax (CIT) is at a fixed rate of 15% on grossed up profits after distribution of dividends. CIT cannot also be charged on non-distributed profits re-invested by the company. A company is not required to complete a separate tax registration. The initial registration includes both the state and tax registration together. Georgia does not demand any special tax on capital returns, as these fall under the general CIT rules and 15%margin.

Traditional and reverse VATs are payable, at a fixed rate of 18%, only for business operations conducted within Georgia. Tax authorities also issue tax residency certificates for companies and individuals along with other tax incentives. Companies that operate within the designated free zones pay zero tax. Those companies that fall into the “Virtual Zone Category” also pay a 0% Corporate income tax rate even in the case of distributed dividends.

Here’s Where We Come In

With LTC Business Services, you will take a step beyond only knowing about the merits of investing in Georgia. We are your one-stop shop for the next step. We specialize in offshore locations and strategic, tailor-made operations. We are your full-service partner to support you at any stage of your business—from starting up to wealth and crises management.

We do not assist with only company formations—we also offer all kinds of business and outsourcing support. With our services, we can combine the Georgian LLC with a bank account in a reputable jurisdiction like Switzerland, ensuring for you the maximum of security. We can do the company formation and (in most cases) the bank account opening fully remotely.

For your business foray into Georgia, we can also help you with:

  • Address and Corporate Secretarial Services
  • Virtual Assistants
  • Management and Operations Staff recruitment
  • Fiduciary and Asset management services
  • Accounting, HR & Payroll
  • Tax and Legal Advisory
  • Supervisory Board Representation
  • Outsourcing
  • Full-service eCommerce solutions
  • Translations
  • Document legalization
  • Acquisition of residency

With us, everything clicks. If you have been considering the benefits of the Georgian tax and business environment, we can guide you through and help you utilize the most lucrative benefits for your business. Our team of experts are here to help you fulfil your goals. Contact us to schedule a confidential consultation at www.ltcbs.eu.

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