Georgia turned into a stable economy that attracts international investors within a short period. The country went through a series of military conflicts, government take-overs, and national upheavals before 2009, and these years were marked by severe economic crises. Also, the breakup of the Soviet Union had impacted the country further. From lacking the basic infrastructure and witnessing high levels of corruption, the country has taken a giant leap towards economic development. 

With the country’s determination to make it to the top of the international arena in terms of ease of doing business, in the 2017-2018 fiscal year alone, there were 10,000 new legal entities registered in Georgia. Georgia also took in investments worth US $10 billion in sectors like energy production, financial sector, construction, and so on. As of now, Georgia offers liberal business conditions in the region with duty-free access to a consumer market of two billion.

Considering the transformation that Georgia has undergone, the establishment of manufacturing facilities in Georgia is the best business decision you can make. From opening a bank account to acquiring the property for the manufacturing facility, Georgia has policies that make establishing businesses simple every step of the way. 

Banking and Investment in Georgia 

The banking sector in Georgia has seen enough reforms to make Georgia one of the best options for international investment. Since banking has become independent from the state, you can open a bank account in Georgia in under 20 minutes with just US $1,500. Making it even more lucrative, investors are not required to submit proof of address or pay hefty taxes. Confidentiality of personal and corporate bank accounts is protected by the bank principles and the absence of the country’s name on the CRS member list.

Moreover, the global de-offshorization process has played an integral role in the development of Georgian banks. Due to the wide spectrum of business credit types that they offer, high interest rates on deposits, and the opportunity to diversify assets securely, the process of investing has been simplified. Duty-free trade is made possible with countries in Asia and Europe, thanks to the possibility of labeling the products as Georgian-made. Also, the liberal conditions make international operations in the IT sector easier and give way to easier conversion of cryptocurrencies into fiat or ICOs. 

There has been steady growth when it comes to the banking sector in Georgia for the past 20 years, so there is no reason to hesitate when it comes to investing in Georgia.

Free Industrial Zones (FIZ) in Georgia 

To make the best possible environment for the establishment of manufacturing facilities, the government has designed free industrial zones where registered companies can carry out trade with European and Asian countries without customs duties being levied. The companies in these zones do not need to pay profit taxes, which makes FIZ attractive to the international investment community. 

Tbilisi, Poti, and Hualing Kutaisi are the three free trade zones in Georgia, and manufacturing is popular in all these free zones. Manufacturing units registered here have benefits like exemption from the corporate income tax as well as property and real estate tax. Interestingly, trade between free zone companies is exempted from VAT and the trade between free zone companies and mainland companies is promoted with a tax as low as 4% of the invoice value. 

Making the maintenance of business easier, there is no requirement for audits or filing financial statements. These free zone entities can carry out payments without restrictions on currency because there are no currency exchange controls in place. To invite more business into the free zones, there are no minimum paid-up share capital requirements or taxes on repatriation of capital.

Even though most companies registered in the FIZ need the annual renewal of commercial license, industries that produce or pack items such as newborn or children nutrition, distribution of electricity, and natural gas are exempted from applying for licenses and permits.

International Trade and FIZ 

As much as Georgia welcomes international investments, it also boosts the established businesses by providing them with an international market to sell their products. Since the country is a transit hub between Europe and Asia, Georgia has amicable relationships with the countries on these continents. 

Georgia has free trade agreements with the EU states, EFTA countries, CIS countries, Great Britain, and Ukraine. The country also maintains preferential trade agreements with more than fifty countries such as India, Japan, Canada, the USA, and Israel where the companies do not have to concern themselves with customs duties. Along with opening up the potential markets for businesses, manufacturing units registered in Georgia are exempted from double taxation. 

Starting Up 

Georgia is ranked as the sixth most business-friendly economy in the world. As you get started with your business in the country, here is a step-by-step guide to establishing a manufacturing unit in Georgia. 

1. Whether you are a local or an international investor, you need to select the type of company you are planning to establish. Depending on the company being a Limited Liability Company (LLC, Ltd), Joint Stock Company (JSC), General Partnership (GP), Limited Partnership (LP), or Cooperative, you can move forward with the company formation process. 

2. Once the company type and name are selected, you can proceed to register the establishment at the National Public Registry of Georgia with the required documents. 

3. Opening a bank account under the company’s name and determining the costs of your business is the next step. Predetermining these numbers will allow you to obtain loans easily and show the bank that you have been granted permission by the administration to start a business.

4. Following this, you need to register yourself with the revenue service. Depending on the location and type of business you do, you may be exempted from paying a large portion of these taxes.

Georgia is undoubtedly one of the best locations in the world to start a business and establish branches of your international businesses. With its foreign policies and relaxed tax laws, business in the country is a profitable option for both locals and international investors. 

So far the country has not made any drastic changes to its policies that make it an attractive spot for establishing manufacturing units.

If you plan to start up or expand your business in Georgia you can always turn to MUNDO where highly-professional specialists will assist in implementing your plans.

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