In the past several years, the Georgian government has notably simplified business registration procedures for foreigners. The promotion of new enterprise establishment had driven the country into several changes. As a result, risks associated with currency control, passport issuing, and other corporate procedures have been eradicated.That is why a distinguished number of entrepreneurs from all over the world consider Georgia to move their existing business or set up a new company to get preferential bonuses in the form of asset protection and reduce the tax burden.
The Law “About Entrepreneurs” of Georgia makes the business registration process for foreigners as simple as it can be for Georgians.For example, there are no requirements for a minimum amount of authorized capital for an organization. In addition, entrepreneurs are not obliged to provide this information to the state. Similar preconditions applied for both residents and non-residents. The only difference is that a non-resident needs to have a legal address while citizens of Georgia are permitted to use their residence address.Anyone, despite their citizenship and place of registration, can hold a company director's position in Georgia. Foreign companies with local bank accounts can sell and buy foreign currency without any restrictions. What are the main aspects of doing business in this country, and what attracts entrepreneurs? This article addresses all aspects of business registration for foreigners in Georgia with all its procedures.
Anyone who wants to start a business in Georgia can do it within one or two working days, just by visiting the Justice House of Georgia.The following documents are required to proceed with a registration process:
- An electronic application, which is filled in by an operator on-site;
- Copy/scan of the ID card;
- Charter or agreement signed by all founders;
- State duty payment receipt;
- Notarized legal address;
- Translator in case you do not know Georgian language.
This list proves that the required documents to set up the business in Georgia are minimal. What is more, the state charges for legal entity registration are reasonably low - about 100 GEL for the next day registration and about 200 GEL to get registered on the same day.
There are five legal forms of Enterprises in Georgia: Limited Liability Company (LLC), Joint Stock Company (JSC), General Partnership (GP), Limited Partnership (LP), Cooperative. Once the company registration process is over, it must be registered with the tax service, which is also happening very swiftly. Though, it is not always necessary to open a legal entity to start a business operation. Many ex-pats in Georgia either get the status of an Individual Entrepreneur or Micro Business.
The definition of self-employed lies in the concept of Micro Business in Georgia, on the assumption of such clarification this status has its limitations:
- Have no right to hire employees;
- Annual turnover can not exceed GEL 30,000;
- Can only engage in certain types of activities that do not require a license.
If any of these requirements are in breach, a person will lose the status of Micro Business and will be automatically assigned to a Self Employed.There is no need to visit the House of Justice to register a Micro Business in Georgia. Registration of this status can be processed in any branch of the Tax Service within thirty minutes by providing only an ID Card.This form of conducting business is very helpful for foreigners at the beginning of their business journey in Georgia.
Individual Entrepreneur - 1% Tax for Freelancers
In recent years acquiring an Individual Entrepreneur with a lower status in Tbilisi or registering a small business in Batumi became very attractive due to its preferential Tax burden. If an annual turnover is less than 30,000 GEL (9 000 USD) per year, the tax rate is 0%. The Small Business owners are responsible for income and expense monthly declarations.
When an annual turnover varies between 30,000 to 500,000 GEL (~ 145,000 dollars) - tax is only 1% of the turnover. Alongside payable tax, business owners with Lower Status are also responsible for submitting income and expense declarations monthly.
If an annual turnover exceeds 500,000 GEL, the turnover tax is 3% of the exceeded amount. But when the turnover for two executive years exceeds the 1,000,000 threshold, the status of the lower business will automatically be removed, and the tax rate will be 20% on the net profit.
Registering an Individual Entrepreneur in Georgia is possible by visiting any branch of the Justice House. The document submission requires only a few minutes. The registration can be obtained on the same day for 50 GEL or the next day for 20 GEL, an additional fee of 20 GEL required for the translation and notarized permission of the Legal Address - another 25 GEL.
During IE registration, a person has to provide a passport and rental agreement. While registering an IE, not at the residence address, the notarized legal address will be asked instead, alongside a foreign citizen's passport.After completing the registration and an identification number assigned, IE has to register with the tax service.
Taxes in Georgia
The Georgian Tax Code has been known for its loyal taxation system. The country offers low taxes and a limited number of activities requiring a license. For most types of activities, taxes are as following:
- Individual entrepreneur – 1% of revenue or 20% of net profit;
- Legal entity – 18% VAT, 15% income tax;
- Microbusinesses do not pay taxes;
- Value Added Tax – 18%;
- Corporate profit – 15%;
- Dividends – 5%;Income (salary) Tax – 20%;
- Import Tax – 0% or 5% or 12%;
- The property – up to 1%;
- Tax at Source – from 10 to 15%;
- Excise tax – not a fixed amount.
Opening and doing business for foreigners in Georgia is possible within a couple of days. Still, we advise referring to professionals in the field for accurate determination of business activity forehead.Company Jara Accounting has been providing assistance and support in business registration, accounting, and tax consulting since 2017 and is ready to share this experience with you. Send a request to get help making the right choice.