Free Zones / Taxation in Georgia
TAXATION REGIME IN GEORGIAN FREE ZONES and Incorporation process
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Georgian Free Zones
There are four free zones in Georgia, all established by Georgian law in free industrial zones. There are some headline advantages shared by all of the free zones along with some unique terms and services.
Advantages shared by all four include:
- 0% Corporate Tax Rates
- Virtual Office Services
- No minimum capital/investment requirement
- 100 % foreign ownership allowance
- 100% profit repatriation
- Remote registration services
- Low Cost Electricity
Free Zones – Comparative analysis
Hualing Kutaisi Free Zone
The Hualing Kutaisi Free Zone was established in October 2015. It is located in Central Georgia, 90 km from a sea port and 19 km away from an international Airport. The main advantage the Hualing Free Zone enjoys over other local free zones is widely available ready made buildings. Moreover, it is the most cost efficient free zone in Georgia.
Poti Free Industrial Zone
The Poti Free Industrial Zone is the oldest free zone in Georgia. It was established in 2007 by the UAE-based large group Rakia. The fact that it is located at a sea port is very convenient logistically. It is also 10 times larger than other Georgian free zones and is a good place for large industrial projects requiring high volumes of raw materials.
Tbilisi Free Zone
The Tbilisi Free zone is Georgia’s newest free zone. Apart from the common advantages enjoyed by all of the free zones, the Tbilisi free zone is focussed on the crypto-mining industry, and one of the largest data centers is located there.
Kutaisi Free Zone
The Kutaisi Free Zone was established in March 2009 on the territory of the famous Kutaisi auto plant. The land plot of 27 hectares is located only 10 km from the Kutaisi International Airport, 95 km from the Poti seaport, and 210 km from Tbilisi. The Company is focused on attracting international companies-tenants to carry out their export-oriented business activities in a tax-free zone. They welcome companies operating in various business sectors: technology, trade and services, light industry, logistics, warehousing, etc. The Holding provides flexible lease terms and an individual approach to each tenant company.
Apart from the above-mentioned differences, free zones also charge different rates for their services. Depending on your needs, we can help you select the best option for you with an eye to paying no more than is necessary.
Taxation In Free Zones
All corporate taxes payable by the company amount to 0% in free zones, which means that the profit you earn remains untouched, and you can easily transfer it from your corporate bank account to your personal account.
This chart provides a basic comparison:
| Taxes in Georgia | For a Mainland Company | For a Free Zone Company |
| VAT | 18% | 0% |
| Corporate Profit Tax | 15% | 0% |
| Tax on Dividend Withdrawal | 5% | 0% |
| Property | Up to 1% | 0% |
| Import | 12% / 5% / 0% | 0% |
| Export | 0% | 0% |
| Personal Income Tax | 20% | 20% |
Important Notes
In spite of the tax advantages, it is important to have a full understanding of your options before deciding how to establish your company’s presence in Georgia or a Georgian Free Zone.
4 % tax with Georgia mainland
Georgian free zones are designed to attract export-oriented industries. To support this, the law sets an additional obstacle to selling products that are manufactured in free zones to Georgia. There is a 4% fee on any sales to Georgia from the free zone. Moreover, the import from Georgia to the free zone is also taxed similarly. There are exceptions for some import and some export. Detailed information can be found in the Law of Georgia on Free Industrial Zones
Banking in Georgia – Mission Impossible
If you are considering having a company with a virtual office in the free zone, don’t look for banking services in a Georgian bank. Georgian banks haven’t been working with Free zone companies for more than a year now. Fortunately, we are able to offer different jurisdictions able to take the place of Georgian banks.
Be careful – Some activities are not exempt from taxes even in free zones
There are a number of activities and industries for which tax exemptions do not apply. These are primarily businesses connected to selling services instead of actual goods. Contact us for a free initial consultation to get a better picture of the whole free zone company incorporation process.
From our side, we will ensure that your Georgian Free Zone company develops successfully and without obstacles. We will suggest the best options for your business based on your objectives, and do all of the legwork for you.
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What is included in Free Zone client licenses?
International Trading
Industrial
Service
E-commerce
Consulting
Financial Services
Prior to starting to work in a free zone, it is important to choose the right industry and acquire the relevant license from the free zone in order to avoid unnecessary expenditures and even significant fines.
A free consultation with us can help you identify the correct industry, necessary procedures, and exact license required from the free zone as a prerequisite for your uninterrupted application process.
Free Zone Incorporation Process
The process of incorporation differs slightly from that required for setting up a mainland company. LLC is the most common form of ownership in Georgian free zones. Setting up an LLC in any of the free zones in Georgia requires 4 simple steps and two working days for registration. The procedures are as follows:
Application Form
We start by filling out a simple application form that contains basic information about your future company and your needs.
Company Registration
Once we have an application, we apply for company registration. This takes a maximum of one working day.
Bank Account
The next day, once the company has been registered, we assist you in opening a bank account in multiple banks, in multiple jurisdictions, and in multiple currencies.
Company Is Ready
The same day, after opening a bank account, we issue an invoice, and you pay for our service. At the same time, the free zone issues you an operating license.
FAQ – Frequently Asked Questions
What Kinds Of Activity Are Forbidden In Free Zones?
According to the law on free industrial zones the following activities shall be prohibited within a free industrial zone:
a) manufacturing arms and ammunition, trading in arms and ammunition;
b) manufacturing nuclear and radioactive substances, trading in nuclear and radioactive substances;
c) bringing in, storing, manufacturing and/or selling narcotic and psychotropic substances;
d) bringing in, storing, manufacturing and/or selling tobacco products and/or tobacco raw materials, except as provided for in the second paragraph of this article.
Do I Need To Renew My Free Zone License?
Yes, it is obligatory for Free Zone companies to renew licenses annually
How Can I Register A Company In A Free Zone Remotely?
You can send us a POA (Power of Attorney), and we will represent you in all required state institutions.
Are There Any Additional Fees For Having A Company In A Free Zone?
Depending on your needs, Free Zone administration can charge different rates for services. We can help select the best option to avoid paying more than is necessary.
