In the CIS, everything is complicated with medium and small businesses. An unstable political regime, constant checks, corruption - all this significantly spoils the life of novice businessmen. In Europe, taxes are such that it is risky to start a business without huge start-up capital. Exactly between Europe and Asia, there is a country with loyal taxes and a comfortable business environment - Georgia. The Georgian government, despite its post-Soviet past and difficult present, does its best to create better conditions for small and medium-sized businesses. It is easy to start and run a business in the country, including non-residents. At the same time, it is important to understand that Georgia is interested not only in itself, it is also an excellent entry point to promising markets in Asia and Europe. In this article, we will look at why Georgia is a promising country for entrepreneurs and what kind of business to do in Georgia for non-residents in 2021.
Economic facts about Georgia that will interest an entrepreneur
According to the World Bank's annual global Doing Business ranking, released in 2020, 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.
Georgia ranks 6th in the world in terms of accessibility and ease of doing business by foreign nationals and 5th out of 117 countries according to the International Budget Partnership (IBP) study on the Open Budget Survey 2020. 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.
Georgia and the European Union have signed a Deep and Comprehensive Free Trade Agreement, as well as a free trade regime with China, Hong Kong, and the countries of the European Free Trade Association EFTA (Norway, Iceland, Switzerland, and Liechtenstein).
The most important thing for entrepreneurs is, of course, taxes. Georgia has 13th place in the world for a loyal taxation system. For example, an individual entrepreneur with a small status will pay only 1% of turnover. You can read more about all preferential tax regimes in Georgia here.
Georgia in a short time has risen to the top of all world ratings of competitiveness and ease of doing business. Therefore, every year more and more investors and entrepreneurs choose this country. Now let's understand what kind of business non-residents to do in Georgia in 2021.
Business ideas for non-residents in Georgia in 2021
The main spheres of the economy for Georgia are tourism and agriculture, but thanks to benefits for the IT sector, many freelancers and small start-ups have also begun to gradually fill the country's treasury with investments and taxes.
Georgia has been breaking records for the number of tourists visiting the country for many years now. Moreover, the season is not limited to the summer period. Batumi beaches are just one of the magnets for tourists from all over the world. Tbilisi, thanks to the mild climate and hospitality of local residents, is visited all year round. Do not forget about the winter holidays in Gudauri, Bakuriani, and Svaneti. And for those who want to improve their health, there are Borjomi, Bakhmaro, and many places with healing springs.
Therefore, it is always a good idea to open a hotel, hotel, hostel, travel agency, cafe, or restaurant in one of the tourist cities of Georgia. In addition, the country's government in every possible way stimulates this area not only with grants but also with special tax regimes. For example, family businesses, private hotels, hostels, and guest houses fall under low status and if your annual turnover is less than 30,000 lari (9,000 dollars) per year, then the tax rate will be 0%. And if the income of your business is from 30,000 to 500,000 lari (~ 145,000 dollars), then you will need to pay 1% of the turnover and submit monthly income and expense declarations.
Despite the fact that foreigners cannot buy land in Georgia, you can still rent a plot of land and use it for agricultural purposes. There will be no problems with the choice of the crop that you will grow. The main thing is to choose the right region. The cradle of winemaking is located in Eastern Georgia. The best grape varieties ripen under the sun, which shines brightly for almost 300 days a year. The most varied varieties of wines come from there. They are very popular all over the world. Tea, tangerines, oranges, and other tropical fruits are grown in the West of Georgia. In this part of the country, the land is so fertile that almost everything grows. In addition to wine, Georgia is the leader in exports for hazelnuts, peaches, and tangerines.
Most farmers in Georgia are eligible for Produce in Georgia grants, which are easy enough to obtain by submitting a good business plan and submitting a competitive application.
If you do not want to farm on a large scale, then the fruit/vegetable trade and tree/home plant nurseries are areas that are also gaining popularity. Along with them, microgreens with vertical beds and mushroom cultivation.
Even world-famous IT companies are already transferring their business to Georgia, thanks to the new tax regime (read more about international companies - a new type of offshore in Georgia here). But for freelancers and young start-ups, Georgia is a promising destination due to its preferential tax regime, affordable rent, and budget prices for living.
You can open an IT-related business in Georgia, and if you create, develop software products (software, mobile applications), you can count on obtaining the status of a Virtual Zone. This completely exempts you from corporate income tax and export VAT. It is important to know that it is imperative to hire employees on the territory of Georgia.
As for freelancers, the growing need of any business to attract customers and sell their offers online creates a demand for professionals who are engaged in promotion and marketing on the Internet. This category includes copywriters, targeting specialists, web designers, graphic designers, social media marketers. These specialties can count on a small status in Georgia when registering as an individual entrepreneur and pay taxes from 1% to 3%.
Before starting a business, you need to study the market and audience in detail, especially if you are going to start your own business in another country. This article presents only the most popular areas and current tax regimes for them. In order to understand exactly what kind of business non-residents to do in Georgia in 2021, what exactly will work or not, a more detailed study is needed for each specific case.