The main task of successful entrepreneurs is to increase the efficiency of their business. For this, standard measures within one country are not always sufficient. To optimize taxation and place your company in a pleasant investment environment, you can choose another jurisdiction with a good reputation. For the last 5 years, among the most promising countries for business, Georgia has been holding leading positions in all world ratings of ease of doing business. In addition, Georgia does not participate in the automatic exchange of tax information according to the CRS standard, and after confirmation of substance, a non-resident can easily open an account with a local bank. What other 11 advantages of registering a company in Georgia in 2021 are, we will tell in this article.
It is not without reason that Georgia is constantly in the lead in all world rankings related to doing business. Every year more and more investors and entrepreneurs choose this country. Here are the main advantages that you can appreciate by opening your business here:
1. Easy to register and conduct business
According to the latest data from the World Bank's annual global Doing Business ranking, released in late October 2019, Georgia was ranked 7th in the world for ease of doing business. And among the countries of the European region and Central Asia, she managed to come out on top. 6th place in the world in terms of accessibility and ease of doing business by foreign nationals.
Georgia also ranked 5th out of 117 countries according to the International Budget Partnership (IBP) study on the Open Budget Survey 2019. Georgia received 81 points out of 100 possible. The assessment is based on government decisions on the budget: what taxes to levy, what services to provide, and how much to borrow, affect the equality and well-being of people, including real opportunities to improve the lives of the most vulnerable. It is imperative that governments inform and involve the public in these vital decisions.
2. You can register and manage your business remotely
A non-resident of Georgia can register any company with legal activity remotely or by arriving in person. Moreover, the timing and all other nuances are identical to the rules for the citizens of the country. That is, the founder, director of the company, and the head can be a foreign citizen of any country. You can register a company for an individual or a legal entity. Only a package of documents for registering a business will depend on this.
You can register a company in Georgia remotely in just two to three days. All you have to do is fill out all the necessary documents in advance and send them to the specialists.
The registration process itself is very simple and consists of 3 stages:
- House of Justice;
- Tax office;
- Bank.
After registration, you do not necessarily have to be in the country. The management of the company can be delegated to the manager. Benefits and tax regimes under which you registered the company will remain unchanged.
3. Taxes and tax incentives \ regimes
Georgia has an extremely loyal taxation system and the “Estonian model” of tax assessment. The main feature of this model is the obligation to pay income tax only upon the distribution of profits. Among other things, a large number of preferential treatment.
Main taxes in Georgia:
- value added tax - 18%;
- on the profit of the organization - 15%;
- for dividends - 5%;
- income tax - 20%;
- import tax - 0% or 5% or 12%;
- on property - up to 1%;
- withholding tax - from 10 to 15%
Benefits for individual entrepreneurs and freelancers:
It is profitable to open an individual entrepreneur with a small status in Tbilisi or a small business in Batumi, as it becomes possible to reduce tax costs. If your annual turnover is less than 30,000 lari (9,000 dollars) per year, the rate will be 0%. It is important to remember that micro-business owners must file an annual return showing their annual income.
If your annual turnover is from 30,000 to 500,000 lari (~ 145,000 dollars), then you need to pay 1% of the turnover and submit income and expense declarations monthly, and accordingly, pay monthly taxes.
Benefits for the IT sphere:
Registration of an IT company in Georgia is a simple and quick process. And the benefits provided by the state make the country attractive for entrepreneurs from all over the world. In fact, after receiving the status of a virtual zone of Georgia, your company will be completely exempt from VAT and income tax.
In fact, a resident of the virtual zone pays only 5% tax on withdrawn dividends and income tax in case of payment of salaries.
In 2021, the Tax Inspectorate of Georgia made adjustments to the interpretation of the Article on activities in the virtual zone and among the mandatory requirements for compliance with the status of the Virtual Zone, the presence of a substance (economic presence) in the country is put forward, namely: administrative expenses, for example, renting an office in which employees of the company, or the presence of specialists from among the citizens of Georgia on the staff.
Back in the fall of 2020, a new regime for an IT company appeared in Georgia. After registering a business with the status of 'International company', you can save on taxes:
- corporate profit 5% instead of 15%;
- income for wages 5% instead of 20%;
- for dividends 0% instead of 5%.
Also, this law applies to companies operating in the field of maritime services. You can read more about all the conditions in the article.
4. There are no requirements for the authorized capital
Foreigners can also register a limited liability company in Georgia on equal terms and be a director. The authorized capital can be in any amount - the minimum is not set. A company of any form of ownership undergoes a simultaneous state and tax registration in the Public Register of the House of Justice of Georgia, where its Charter will be kept. This provides access to information about the work of the company and its members for everyone, without exception, if the need arises.
5. Bank account for foreigners
Banks of Georgia for several years in a row has become the best representative of the online banking service among the countries of Central and Eastern Europe. In addition to the fact that the banks of the country guarantee absolute confidentiality because they do not transfer financial information about non-residents to the tax authorities of their countries, they also offer the possibility of keeping free funds on deposits, asset management, and brokerage services, insurance and leasing.
Any company that enters the Georgian market needs to open an account in a Georgian bank, get access to all the necessary tools - Internet banking, acquiring, business cards, etc. - fast and reliable. Non-residents of the country can also open an account in a Georgian bank remotely in an accelerated mode. It is enough just to confirm the economic presence and choose a bank.
6. Residence permit for investment
Due to the fact that a large number of foreigners are interested in obtaining a residence permit in Georgia, as well as directly the citizenship itself, in 2019 amendments were made to the law “On the legal status of foreigners and stateless persons”. Now, in order to obtain an investment residence permit for 1 year, you will need to become the owner of real estate in the amount of at least $ 100,000.
There are other ways of obtaining a residence permit, for example, registering an individual entrepreneur and after reaching an annual turnover of 50,000 lari, you have the right to receive a residence permit for a period of one year. You can find out about other ways of obtaining a residence permit by clicking on the link.
7. Georgia does not participate in the automatic exchange of tax information according to the CRS standard
To stop money laundering and tax evasion, countries hastily began to resort to deoffshorization. This happens by signing an agreement on the constant and automatic exchange of data on clients with tax authorities from other jurisdictions within the framework of the CRS protocol. But, unfortunately, honest entrepreneurs also suffer from this.
The main essence of this system is that countries that have signed an agreement annually and without a request send all data on non-resident entrepreneurs to the tax service of the states to which they belong. The list of these countries is constantly growing and now has more than 100. Georgia is not on this list until 2023. This means that you can be sure of absolute confidentiality.
8. Convenient accounting and reporting
Accounting in Georgia is done through the taxpayer's electronic account. The interface of the office is completely in Georgian, but there is a translation into English. You can correct the data online, the main thing is that each transaction is confirmed by the appropriate documents. The base is based on the international chart of accounts.
To start keeping accounting, you will first need to enter all the data on transactions on the current account or cash register in the electronic program, reflect all processes in acts and invoices in the form of appropriate postings. On the basis of electronic accounting data, declarations are formed on a monthly basis.
9. Ability to access international payment systems
Payment systems provide a personalized service system that is better suited for modern business and is maximally focused on online projects. In addition, thanks to the use of new technologies, opening an account, accepting and processing payments is possible in a shorter time frame. Georgian banks work seamlessly with international payment systems, which will allow you to easily make transfers, accept payments and withdraw funds via ATM.
10. Georgia's unique location between Europe and Asia
Georgia has a strategically advantageous territorial location. In addition, there is unhindered access to sea routes, convenient transport infrastructure, and loyal pricing of operating costs. All these factors make Georgia one of the most competitive jurisdictions in Eurasia, and in some aspects, the whole world.
11. 57 existing double taxation treaties
A double taxation treaty is usually concluded between two countries. The agreement prescribes the rules for collecting taxes on the income of a resident of one country received in another. The agreement specifies the types of taxes subject to the document and the legal entities to which they apply. Georgia has 57 double taxation treaties for 2020. If an agreement is concluded between your country of residence and Georgia, then this will allow you to significantly save on paying taxes in an absolutely legal way.
These are the main advantages of Georgia as a profitable jurisdiction for business, but the government of the country every year works to improve the business climate and attracts all new investments with competent reforms and a system of grants for small and medium-sized businesses. For those who are looking for a country that meets international standards, has a loyal tax regime and a modern banking system, then Georgia is an ideal option. Leave a request to get a free consultation on the registration of a company in Georgia.