Over the past 2 years, relocation and setting up business in different countries became extremely relevant among entrepreneurs. In search of the most favorable conditions, they consider the ease of registering and running a business in the country, the amount of taxes they have to pay, and the level of legal protection of private property and contractual relations. Let's take a look at the key aspect of choosing a country for your business as exemplified by Georgia, Turkey, and Serbia.
Opening a company
When registering a company in a new country, it's important to consider the speed and simplicity of this procedure.
In the World Bank's Ease of Doing Business ranking, Georgia ranks first among 190 countries in terms of the speed of starting a new company. Business registration here takes only two days at the House of Justice and requires submitting the minimum number of documents to a single window: your company's legal address, the owner's passport, an opening application, and the company's charter.
In Turkey, opening a company takes about 6 days. You'll need a similar package of documents, although the country has a number of specific organizational and legal entity forms such as an anonymous company or a limited company with shares, each of which will require additional registration data. After the documents are prepared, the company is registered at the Ministry of Trade of Turkey.
In Serbia, company registration requires an opening application, the company's charter, the confirmation of authorized capital deposit, a legal address, the owner's passport, and documents confirming the owner's professional qualifications and management experience. The documents are reviewed at the Business Registers Agency. The procedure takes about 7 working days.
When choosing a country for their business, the owner evaluates the local tax rates and incentives.
Georgia attracts entrepreneurs from all over the world precisely because of its preferential taxation system. Its tax rates are already low and easy to calculate:
- 18% VAT
- 15% profit tax
- 20% personal income tax
- 5% dividend tax
The main tax advantages of Georgia include:
- no VAT on services rendered abroad
- 15% profit tax paid only when distributing profits and not when reinvesting into the company
- 5% dividend tax
Aside from that, there are also preferences for international companies, IT companies, Free Industrial Zone companies, and individual entrepreneurs with the Micro Business (0% tax) and Small Business (1% tax) statuses. Social security contributions are only 2% per employee. There are no minimum wage requirements. Foreigners don't need a permit to work in Georgia.
Turkey, like Georgia, allows submitting tax declarations online, which is quite convenient. However, the tax rates are higher:
- 18% VAT
- 20% profit tax, 25% for the financial sector
- 15 to 30% personal income tax depending on the wage
- 10% dividend tax
Turkey has special economic zones with tax preferences, although opening business there is allowed only for entrepreneurs whose countries aren't sanctioned.
If you decide to hire staff, note that you'll need to employ 5 Turkish citizens for each foreigner. Foreign employees must have a residence permit and a special work permit.
Social security contributions are 20.5%, and unemployment insurance premiums are 2%.
Tax rates for companies in Serbia depend on a number of factors such as legal entity form, company size, and line of activity.
Standard rates are as follows:
- 20% VAT, 0-10% on certain goods and services
- 15% profit tax
- 10% personal income tax
- 15% dividend tax for residents, 20% for non-residents
The company's social security contributions for employees amount to 17%, with another 30% paid by the employee.
Serbia has tax incentives for research companies, companies from the free trade zones, and foreign investors.
Non-residents who are not citizens of the countries of the European Economic Area can't work in Serbia without a special work permit.
Protection of company rights and interests
The legal security of businesses in the country is determined by the presence of laws protecting the interests of entrepreneurs and the low level of bureaucracy and corruption.
The protection of the rights and interests of companies in Georgia is governed by the following laws: "On Entrepreneurs", "On the Protection of Consumer Rights", "On Intellectual Property", "On Competition", and "On Insolvency Proceedings".
In addition, the country has relatively low corruption (42nd out of 180 countries according to Transparency International) and powerful mechanisms of protecting private property.
Turkey features a well-developed system of legal protection for businesses. The main legal acts regulating business in Turkey are the Civil Code and the laws "On Intellectual and Artistic Works", "On the Protection of Competition", and the Execution and Bankruptcy Law.
Notably, Turkey is facing some issues with corruption (109th out of 180 countries according to Transparency International), which can affect the business sphere.
Serbian legislation is also aimed at protecting the interests of investors and entrepreneurs. The legal framework here includes a similar body of business protection laws as in Georgia and Turkey: "On Social Entrepreneurship", "On Copyright and Related Rights", "On Protection of Competition", and "On Bankruptcy".
High levels of bureaucracy and corruption (106th place out of 180 countries according to Transparency International) are present here and can make doing business difficult.
In any case, as members of the World Intellectual Property Organization (WIPO) and the World Trade Organization (WTO), Georgia, Turkey, and Serbia are thus considered guarantors of the rights of investors and entrepreneurs.
Based on this study, we can conclude that the main arguments for accommodating business favor Georgia. This country has transparent and automated business registration and operation procedures, and its preferential taxation system, high level of legal protection, and low corruption make it the safest environment for growing your enterprise.