TFZ — launching business in georgia

Georgia is a country of business opportunities

Currently, Georgia is not only a country known for its colorful hospitality and centuries-old traditions, but also a country with tremendous opportunities for doing business for foreign companies.

According to the Transparency International Corruption Perception rating, Georgia shared 41th place with Latvia, Spain, Saint Vincent and the Grenadines in 2018 among 180 countries of the world. At the same time, Georgia has the best place in the region of Eastern Europe and Central Asia.

Judging by the level of economic freedom, Georgia has overtaken all its neighbors: Russia ranked 138th, Armenia ranked 105th, Azerbaijan ranked 152th, Turkey – 78th.

Georgia in Doing Business-2019

Also, for 10 years that Georgia’s been present in the Doing Business-2019 rating, the country has risen from the 100th to the 6th (!!!) position among 190 participating countries. Only such countries as South Korea, Hong Kong, Denmark, Singapore and New Zealand are ahead of Georgia.

In separate categories, Georgia took the following positions in the Doing Business-2019 report:

• company registration – 2nd rank,
• obtaining construction permits – 27th rank,
• connection to the power supply system – 39th rank,
• property registration – 4th rank,
• obtaining loans – 12th rank,
• protection of minority investors – 2nd rank,
• taxation – 16th rank,
• international trade – 43rd rank,
• enforcement of contracts – 8th rank,
• insolvency resolution – 60th rank.

This was largely due to the emergence of tax-free industrial zones in Georgia, which greatly increased the interest of foreign companies in Georgia.

As an ideal location for both local and international companies, the Tbilisi Free Zone (TFZ) includes the advantages of being located in the capital of Georgia, territories exempt from tax and low operating costs.

TFZ is located in Tbilisi itself and is particularly attractive for companies whose business activities are related to efficient logistics, high consumption of electricity, and the use of skilled labor resources.

TFZ carries out its activities in accordance with the law of Georgia on Free Industrial Zones, which provides the following benefits for companies.

TFZ Tax Benefits:

• TFZ is exempt from corporate income tax;
• Interest and dividends paid by the TFZ Company are not subject to taxation and are not included in the taxable income base;
• Trade between TFZ companies is exempt from VAT
• TFZ companies are not required to deduct personal income tax from their employees;
• TFZ companies are not responsible for the assessment and payment of value added tax refunds (RCVAT);
• TFZ export is exempt from VAT, taking into account the right to a tax benefit;
• The property, including the land plot located in the TFZ, is exempt from the property tax;
• Trade between the TFZ company and a Georgian company is taxed at a rate of 4% of the invoiced value.

The only tax is 20% of the income tax, which is paid to employees in the form of a receipt for wages, and employees then declare and pay themselves.

TFZ operating benefits:

• Reliable infrastructure;
• Low rent;
• The right to obtain a national certificate of origin;
• Simple company structure;
• Turnkey solutions;
• Proximity to qualified labor resources of Georgia;
• Simplified registration procedures;
• Low prices for utilities and communications services.

The customs office is located in the territory of the zone directly, and the product/raw material passes the customs office without delay, as it is not subject to customs clearance, only to declaration for verifying compliance with legal requirements.

The Zone companies are registered in accordance with standard registration procedures, which take one working day from the moment the relevant documents are submitted.

To start the registration process in TFZ, one must submit a completed questionnaire (online or on paper). Based on your application, our company applies for registration and licensing permission for your business activity or clarifies the reasons for the refusal.

Please note! We are not TFZ administrators, but we work with them directly

In the case of companies providing services, the main difficulty is in opening an account with a bank. We assist our clients in opening accounts at the Bank of Georgia, provided that the customer has a physical office and employees. In the event that the company has not organized SUBSTANCE, we offer comprehensive support for organizing an office in Georgia or opening an account in Azerbaijan, Armenia, and other nearby countries.

 If you have any questions about opening business in Georgia or need advice – write to us!

Good luck.