Which companies are developing in Tbilisi
Various companies successfully operate in Georgia: Georgian legal entities, foreign branches and subsidiaries, individual entrepreneurs: digital nomads, freelancers, start-ups. They all chose Tbilisi and other cities in the country for the many advantages it offers them. How and why businessmen start working in Georgia, and who among them enjoy the greatest success – will be discussed in our material.
Why businessmen choose Georgia?
Georgia occupies a favorable trade geographical position between Russia and Asia, West and East. It is a strategic and historical center of commerce. All markets become available to investors here, and business itself gets the opportunity to develop steadily and operate on the international stage.
Entrepreneurs highlight a number of advantages of doing business in Georgia, especially in Tbilisi:
- Low tax rates;
- Business-friendly country;
- Favorable tax regimes;
- Free industrial zones;
- Rule of law de facto, not just de jure (in fact, not just on paper);
- Absence of corruption;
- Loyal policy of the Georgian government towards non-residents and foreign business.
How to start a successful business in Georgia?
The activity of any company in Georgia starts with registration. This step is preceded by two stages: the choice of the organizational legal form of the future enterprise and the taxation system for it. This has a significant impact on the development of the business, as the correct choice depends not only on the tax burden, the types of records that the business must keep, but also on the peculiarities of its activities. In brief, there are six types of organizational and legal forms in the country to choose from:
- LLC (limited liability company) – the founders are not liable for the company’s debts with their own property;
- IE (individual entrepreneur) – the optimal choice for small and medium-sized businesses with small turnovers, as well as for freelancers, start-ups and digital nomads.
- JSC (joint stock company) – the capital of the company is represented by shares. Liability is limited to the company’s property. Shareholders are not liable for the firm’s debts;
- LP (Limited partnerships) – partners of such a company are divided into complementarians and limited partners. The former have no limitations on liability, while the latter pay only the guarantee amount in case of liabilities;
- JLC (Joint liability companies) – the company is established by several partners who are equally liable for the firm’s obligations;
- Co-operative – participants are liable with their personal property. A suitable form of ownership for a family business;
Tax burden on business in Georgia
The basic tax regime in Georgia is similar to the general taxation system of Estonian tax system.
General taxation system
If a company in Georgia earns more than GEL 100,000 per year (only earnings from Georgian sources are considered) – it becomes a payer of 18% VAT. Other conditions of the regime:
- Profit tax – 15% (not payable on reinvestment of profits);
- Income tax – 20%;
- Dividend tax – 5%.
Preferential tax regimes
To take advantage of the reduced tax rates, an individual entrepreneur needs to obtain small business status. For example, individual entrepreneurs with such a status pay 1% of profits.
Registration in a free industrial zone (FIZ), which Georgia has opened for the development of IT, shipping and other activities, also optimises taxation for businesses
How to register a business in Georgia?
The process of registering a company consists of three stages: submitting documents to the House of Justice, registering with the tax authorities and opening a bank account. It usually takes a few days to start a business in Georgia.
You need to apply to the House of Justice with an application for registration, which should be accompanied by:
- Passport or power of attorney of a representative with a notary’s certificate;
- Company’s charter
- Documents confirming the legal address of the company. The presence of immovable property in Georgia greatly simplifies this stage;
- Receipt on payment of state duty.
If the documents are not in Georgian, you will need their notarised translation. After successful registration an SMS with TIN and password to enter the personal cabinet of the taxpayer will be sent to your Georgian phone number. In it you can download the certificate from the public register.
In the bank you need to confirm with documents:
- What the company will be doing or is already doing, if a branch of a foreign representative office is being opened;
- Source of income;
- The number of new jobs in Georgia after the registration of the business.
- The company will be checked for links to terrorism or other criminality and additional documents will be requested if necessary.
Types of successful activities in Georgia
Traditionally, tourism business is popular in Georgia, so it is common to open:
- Hotels and hostels;
- Financial institutions. This type of activity is associated not only with the presence of a large number of foreign guests in the country, but also with the constant need for transactions to/from abroad on the part of the business.
- Manufacturing companies. They are engaged in the manufacture of deckchairs, textiles for hotels, beach mats, umbrellas.
- Activities may also be quite exotic for the local population, e.g. production of kvass;
- Business related to goods and services for tourists. For example, cleaning companies, beauty salons, catering establishments.
In addition to tourism, businesses related to key strategic industries are in demand in Georgia: construction, medicine, logistics and transport, energy, food industry, telecommunications, etc.
Top 5 most successful companies in Georgia in Tbilisi
- SOCAR Georgia Petroleum – network of the most popular petrol stations in Georgia
- Caucasus auto import- Import/export of new and used cars
- Magticom – telecommunication operator.
- Bank of Georgia – Bank of Georgia
- EPAM Georgia – IT
Business in Georgia allows companies to operate internationally without offshore jurisdictions. This is an excellent opportunity to relocate a business to a developed, stable market.
Successful business in Georgia can be conducted by an entrepreneur who has chosen the right legal form and optimised taxation, as well as successfully determined the type of activity in advance. Everyone can open a company in the country, it is easy and does not take much time. Plus, the future owner of a business does not have to be present at the state authorities in person – it can be registered by power of attorney.