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Georgia

Why Georgia?

Georgia is located between Asia and Europe, bordering Turkey to the southwest, Azerbaijan to the east, Russia to the north and Armenia to the south. Ethnic Georgians account for 84% of the population, with other ethnicities including Armenians, Greeks, Russians, Jews, Azerbaijanis, Ossetians, and Abkhazians.

Advantages

Georgia has signed agreements for the avoidance of Double taxation ( DTAs) with over 50 countries across the globe, which includes Austria, Azerbaijan, United Arab Emirates, Belgium, Bulgaria, United Kingdom, Germany, Denmark and many more. The country offers a number of special advantages to foreign investors, as follows-

Georgia offers several special advantages to foreign investors, including:

Strategic location:

Georgia is located at the crossroads of Europe and Asia, making it an ideal gateway for trade and business between the two continents.

Investment-friendly environment:

Georgia has made significant reforms to its legal, regulatory, and business environment, making it more attractive for foreign investors. The country has a liberal and open economy, low taxes, and simplified procedures for setting up and operating businesses.

Free trade agreements:

Georgia has signed several free trade agreements with countries around the world, including the European Union, Turkey, and China. These agreements provide access to a large market and create a favourable environment for foreign trade and investment.

Skilled workforce:

Georgia has a well-educated and skilled workforce, particularly in the fields of IT, engineering, and tourism.

Low Corporate Income Tax:

Georgia has a flat corporate income tax rate of 15%, which is one of the lowest rates in the world.

Tourism potential:

Georgia has a rich cultural heritage, beautiful scenery, and a thriving tourism industry, providing opportunities for foreign investors in the hospitality and tourism sectors.

Simple Tax Regime

Georgia has a simple and transparent tax regime that makes it an attractive destination for foreign investors. Here are some key aspects of the tax regime in Georgia:

Flat Personal Income Tax:

A tax on personal income earned by Individuals. The rate is a progressive tax with the following brackets-

1% on the first $1,000 of taxable income
2% on taxable income between $1,001 and $3,000
3% on taxable income between $3,001 and $7,000
4% on taxable income between $7,001 and $10,000
5% on taxable income between $10,001 and $12,000
75% on taxable income over $12,000

Flat Corporate Income Tax:

Georgia has a flat corporate income tax rate of 15%, which is one of the lowest rates in the world.

Value-Added Tax (“VAT”):

The standard VAT rate in Georgia is 18%. There is also a reduced rate of 5% for certain goods and services, such as medicines and medical equipment.

Property Tax:

Property tax in Georgia is relatively low, with a maximum rate of 1% of the property value.

Simplified Tax System:

Georgia has a simplified tax system with few taxes and simple procedures for paying taxes.

Tax Incentives:

Georgia offers tax incentives for certain types of businesses, such as those in the tourism and IT sectors, as well as for businesses in certain regions of the country.

Overall, Georgia’s simple and transparent tax regime, combined with its low tax rates and double taxation avoidance treaties, make it an attractive destination for foreign investors.

Georgia Companies

There are several types of companies that can be formed in the state of Georgia, including:

Joint stock company –

These are incorporated by large companies operating in Georgia. These are usually the kind of companies where the members put together a large capital.

Sole proprietorship:

A business owned and operated by one individual. The owner is personally responsible for all the debts and liabilities of the business. Foreign citizens can also register for an individual enterprise in Georgia by filling an application providing their details and paying the required fee.

Partnership:

A business owned by two or more individuals who share in the profits and losses of the company. There are two types of partners in limited partnership Georgia- Commandites and Complementars.

Limited Liability Company (“LLC”):

A hybrid business structure that combines the liability protection of a corporation with the tax benefits of a partnership. It is the most typical form of business entity that is registered in Georgia.

Corporation:

A legal entity separates from its owners that can issue stocks, incur debts, and enter contracts. There are several types of corporations, including C corporations and S corporations, which have different tax implications.

Non-profit:

A type of corporation that is formed for a charitable, educational, or other socially beneficial purpose. Non-profits are exempt from certain taxes and can receive tax-deductible donations.

Author: Chandrawat & Partners

Topic: Doing Business in Georgia

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