Georgia

Economic and Legal Climate

Georgia, located at the crossroads of Europe and Asia, offers a favorable business environment characterized by a liberal economic policy, low taxes, and ease of doing business. The country has strengths in sectors such as tourism, agriculture, energy, and information technology. Georgia’s legal system is based on civil law, providing comprehensive legal protections and a transparent regulatory framework. The country is known for its strong anti-corruption measures and business-friendly reforms.

Official Languages

The official language of Georgia is Georgian. However, English is increasingly spoken in business circles, especially in larger cities and among the educated population. Russian is also widely understood. Engaging local legal and business experts who are fluent in Georgian is advisable for international investors.

Banking System

Georgia has a well-developed and regulated banking system overseen by the National Bank of Georgia (NBG). The country hosts a variety of local and international banks offering comprehensive financial services. The banking sector is known for its stability, innovation, and strong emphasis on digital banking services, supporting both domestic and international business operations.

Maintenance Costs

Maintenance costs for companies in Georgia are relatively low. Annual compliance requirements include renewing business licenses, filing tax returns, conducting audits, and maintaining proper accounting records. These processes are straightforward and affordable, contributing to manageable ongoing operational expenses.

Setting Up Costs

Setting up a company in Georgia involves several costs, including incorporation fees, legal fees, and registration with the National Agency of Public Registry. The process includes drafting the company’s articles of association, obtaining a tax identification number, and registering for VAT. The incorporation process is efficient and can typically be completed within a few days if all documentation is in order.

Corporate Tax Rate

Georgia offers a highly attractive corporate tax regime with a flat corporate tax rate of 15% on taxable profits. Additionally, the country provides various tax incentives and deductions for research and development (R&D), innovation, and investments in specific regions or sectors, enhancing tax efficiency for businesses. The introduction of the Estonian tax model defers corporate income tax until profits are distributed, encouraging reinvestment and growth.

Territorial or Non-Territorial Principles

Georgia operates a territorial tax system, meaning only income derived from within Georgia is subject to tax. This principle makes it an attractive destination for businesses looking to minimize their tax liabilities on overseas income.

Currency Regulation

Georgia imposes no significant restrictions on foreign exchange transactions, allowing for the free flow of capital. The currency used is the Georgian lari (GEL).

Advantages of Setting Up a Company in Georgia

1. Favorable Tax Regime: Low corporate tax rate and various tax incentives enhance profitability.
2. Ease of Doing Business: Georgia ranks highly on global ease of doing business indices due to its streamlined regulatory framework and business-friendly reforms.
3. Competitive Labor Costs: Access to a cost-effective and skilled labor force, particularly in sectors such as tourism, IT, and agriculture.
4. Strategic Location: Georgia’s location provides easy access to European, Asian, and Middle Eastern markets.
5. Business-Friendly Environment: Transparent regulatory framework, strong anti-corruption measures, and supportive government policies facilitate easy company setup and growth.

Disadvantages of Setting Up a Company in Georgia

1. Market Size: Georgia’s domestic market is relatively small, which may limit local growth opportunities.
2. Language Barrier: While English is increasingly spoken, proficiency in Georgian is essential for many legal and administrative matters, necessitating local expertise.
3. Political and Economic Stability: While improving, Georgia has experienced political and economic challenges in the past, which may present risks for some investors.

Conclusion

Georgia offers a highly attractive environment for setting up a company, with its favorable tax regime, ease of doing business, and strategic location. Despite challenges such as market size and language barriers, the overall advantages make Georgia a compelling destination for international investors. Global Expand can assist you in navigating the complexities of setting up a company in Georgia, ensuring a smooth and successful entry into this dynamic and business-friendly market.