Ease of registration and low tax rates are the realities of entrepreneurship in this country

Georgia is steadily rising in international rankings reflecting the ease of doing business. In the European Doing Business 2017, it entered the top 20 for the first time, overtaking Italy, Spain, Greece and other countries. Comfortable conditions have been created for those who decide to move to Georgia and become an entrepreneur there. Step-by-step instruction about what package of documents, how much money and time it will take to open a business in this country.

What you need to know at the start

Georgia has a law “On Entrepreneurs”, according to which all the rules for starting and running a business are the same for foreigners and citizens of Georgia. Companies are registered with the National Public Registry Agency under the Ministry of Justice of Georgia, where data and documents about them are kept in public access, including the charter. This means that each person can easily obtain information about the activities and participants of a particular company.

State and tax registration companies are held in the Houses of Justice at the same time - according to the principle of one window. Only VAT registration and obtaining the status of an electronic payer require a separate application to the Revenue Service, which controls taxes in Georgia.

Some activities require state permission or licenses. First of all, these are areas related to the health and safety of a person, country and environment(health care, construction, communications, energy, gambling, etc.). Full list such areas are contained in the law "On licenses and permits". A foreign businessman can request permission for licensed areas of business on a par with a Georgian one.

Requirements for minimum size there is no authorized capital for organizations in the law; moreover, an entrepreneur may not even report this information to the state. Banks are the only exception. Any person can become the head of the company, regardless of his citizenship.

Which form of registration to choose

This choice depends only on the desire of the businessman. “In Georgia, the forms of individual entrepreneur and LLC are most often chosen. Other species usually use large companies, - analyzes the expert on corporate law Tariel Chochishvili. “The key differences between legal entities are in the rights of owners and the responsibility of the founders.”

Basic forms of registration:

individual entrepreneur;

society with limited liability;

Joint-Stock Company;

joint liability company (partnership with unlimited liability);

limited partnership (limited liability partnership);

cooperative;

company branch.

Individual entrepreneur is not a legal entity. At the same time, he is personally liable to creditors for any obligations arising in connection with his business activities.

“To become an individual entrepreneur, you need to register in Georgia,” notes Oleg Zobov, an entrepreneur, owner of a travel company in Georgia. “And if you have not purchased your housing here, you will have to ask for help with the registration of Georgian citizens.”

“According to a number of international agreements (including those in the post-Soviet space, including Russia), a foreigner is liable with all his property available to creditors, regardless of the country in which this property is located,” explains Tariel Chochishvili.

Limited Liability Company is the most popular form of business. The liability of founders to creditors is limited only by the property of the company, and to each other - by shares in the total capital. A company can be established in Georgia by any individual or legal entity, and its capital is divided into shares only once, without the right to issue new ones.

Joint-Stock Company- entity, authorized capital which is divided into shares. Shareholders can issue different types of shares and increase the capital of the company by issuing additional shares. Responsibility joint-stock company limited to the value of assets, and shareholders are not liable for the company's obligations to third parties.

Solidary Responsibility Society- a company in which several partners carry out a permanent and independent entrepreneurial activity on behalf of the company. The founders are personally responsible for the obligations of the company. Partners can only be individuals.

Limited company brings together several partners to operate under a common brand name. The Company has two types of partners: limited partners (limited partners), whose liability to creditors is only to pay the guarantee amount, and full partners (complementaries), whose liability is not limited. Dividends may be distributed among the limited partners.

cooperative is created with the aim of developing a common business and increasing the profits of its participants. First of all, this form of business is aimed at achieving the interests of all participants, and making a profit fades into the background. The cooperative is a legal entity. The liability of cooperative members to creditors is limited to their own property.

Company branch- a subdivision of a business entity that is not a separate legal entity. The founder's liability cannot be limited to the assets of the branch itself: it bears liability for all obligations of the branch.

How to file your business

“Opening a business will take no more than 30 minutes,” says Georgian entrepreneur Solomon Mamuchishvili. “To do this, you need to come to the House of Justice, fill out documents together with consultants and pay all fees on the spot.”

If the entrepreneur does not speak Georgian, the presence of a “translator” is obligatory for him, that is, a person who will help to familiarize himself with the documents and correctly understand the employees of the registration services.

The future individual entrepreneur needs to have an identity document, a questionnaire that can be filled out on the spot, and a receipt for payment of the state duty. If the businessman does not own the real estate in which he is to conduct his business, then the consent of the owner or a drawn up and certified agreement on the use of the specified object (lease, hire, etc.) will be required.

The cost of registering an individual entrepreneur in Georgia is 20 lari (about $ 8) when registering in one working day and 50 lari ($ 21) in case of issuing documents on the day of application

For commercial organizations More documents needed:

application (filled in by the operator accepting the documents);

a copy of the identity card;

agreement/charter signed by all partners/founders and duly certified;

receipt for payment of state duty.

If these papers are submitted by a representative of the founders, he must have an identity card and documents confirming his authority. Registration documentation can be certified by a notary or an employee of the House of Justice.

The name of the company is written only in Georgian, but this will not affect the possibility of using the Latin alphabet on signs along with the Georgian version.

The cost of registering a company is 100 lari (approximately $42) in case of registration of a package of documents in one working day and 200 lari (approximately $83) in case of urgent registration.

Taxation

On January 1, 2017, a provision came into force in Georgia according to which law firms may not pay income tax if they send funds for business development.

For legal entities, the standard rate for value added tax is 18% (for electricity, shipping, tour operators, a zero VAT rate is applied). Income tax - 15%, income tax - 20%.

An individual entrepreneur can take advantage of a preferential taxation regime: if his income does not exceed 30 thousand lari (about 12.5 thousand dollars) per year, then he is exempt from taxes. This rule does not apply to trade, the work of financial companies (for example, currency exchange offices), licensed activities and individual entrepreneurs with employees. If a businessman earns up to 100 thousand lari (about 42 thousand dollars) a year, then he will have to pay 5% income tax.

There are three preferential taxation regimes in Georgia.

"Free industrial zones» for the export of Georgian goods to the EU market.

"Free warehouse enterprise" for international shipping companies.

For international financial company , which is exempt from income tax and tax on income from securities.

How to close a business

“We need to submit documents for closing the company to the House of Justice, and if it has no debts to creditors, then there will be no problems. The Revenue Service will conduct a tax audit, which can take up to three months. Based on the results of the check, the registration of the company is canceled in the register,” explains Tariel Chochishvili.

You can cancel the registration of an individual entrepreneur within one working day. Liquidation process legal entity must be completed no later than four months, if the company has no debts.

Instead of a resume

Sometimes a person is separated from his own business only by the lack of information on how to properly organize his business. In Georgia, it is easy to get help and support from the professional community. There are state and private programs to support small and medium-sized businesses, co-finance business projects.

When I was asked what a foreigner should do in Georgia, I usually answered "work with foreigners" and there was logic in this. The solvency of the residents of Georgia themselves is low and you will not earn serious money there, though life is not expensive. But life does not stand still. In Georgia, a still weak but already noticeable middle class has grown up, the so-called generation of Saakashvili, those who are now 17-25 years old. For the most part, these are educated guys, many of them are IT specialists and specialists who know foreign languages who periodically travel abroad. They are drawn to everything new, they are open to communication and new experiences, and they are a vivid contrast to the offensive image of a Georgian who does not get out from behind the table, where he drinks wine and eats barbecue, not forgetting to look under the skirt of a tourist. By the way, having lived in Georgia for three years, I have not found confirmation of the ridiculous Soviet jokes about Georgians, well, you know what content. And who came up with these jokes? But it's all poetry. Let me tell you about my friends in Batumi who have staked their business on the new and modern Georgia.

A married couple from Belarus moved to Georgia a few years ago and have been in the construction industry for a long time. That is, they did not lay tiles, of course, but managed projects. For a long time exactly Building bussiness was the most profitable and, frankly, the only possible one. We return to the topic of the solvency of the inhabitants of Georgia, who are not even a third among the buyers of new, and even more so elite real estate, and so mostly foreigners. So, the guys decided to open a solid network pizzeria and their establishment in Batumi is unique, both in terms of investment, and in terms of the level of service offered and overall presentability. Although, no, they have a competitor - McDonald's, which is in the neighborhood. They chose a place in Batumi Mall and Batumi people know very well where it is, pay attention to the second floor -

They have not opened yet, but I think that by the time this article is published, you will already be able to visit them.

In general, I like to visit projects in the process of their creation and figure out what awaits them. Remember, a couple of years ago, I told how my Israeli friends opened a brewery in the resort of Eilat? By the way, the only brewery on the entire Red Sea. Today, their establishment ... how to put it mildly? You will most often not get there without a preliminary table reservation, and their beer is served in the most elite restaurants and hotels. Then they opened another restaurant in the same place. But Yashka Ziryukin, the owner of the establishment, did not stop there and decided to become a pilot, but that's a completely different story.

I also told you about Shimi Margolis, who opened a hotel in the mountains of Galilee, see, and most recently I told the story of two friends who opened a network of hostels and you need to book places well in advance. And many other projects opened by my friends in different countries world, I don't want to list them all now. I want to say that they were all extremely successful and I predict that this project of the Pizza Room pizzeria in Batumi will be just as successful.

There are several reasons for my assessment. Firstly, there are very few serious network establishments in Georgia and especially in Batumi. Cafes from the series "Uncle Vano will cook khash, pizza, Chinese mushrooms and make repairs in your apartment" - there are many of them, but their level leaves much to be desired. As well as service, product quality and, frankly, sanitary standards. Everything is clear, fast, professional and without ambition in one place to cook pizza and cook kharcho, which is why both the first and second are bad.

The guys seriously invested in their project. I did not ask how much it all costs, but it is clear that everything here is very thorough and for a long time. And the location is very "passing" in the Batumi Mall on the embankment, where the concentration of the middle class of Georgians and many tourists is just high. Just this one shopping center, full of fashion boutiques and a huge supermarket (not the cheapest) implies a certain contingent. In the photo below, the ventilation system, and not at all a huge TV, as I first thought -

Seize the moment, a few more days and the restaurant will open -

Inside, it’s just sterile cleanliness, although the final work has not yet been completed -

They made their own branded glasses, salt-pepper-sugar and even their own coffee -

In the photo, the baking unit looks small. Illusion of the eye, he is as tall as a man -

Utility rooms, for example, a refrigerator, over which they finish with the installation of ventilation -

Here is the staff room, where the boys and girls will have their own wardrobes, plus a toilet and shower -

I also asked how much they intend to pay employees? They answered that in the region of 1000-1200 GEL per month, which is twice the average salary in Georgia. But you still have to qualify, and it's not easy. They need people who are literate, advanced and, most importantly, responsible. And to know foreign languages.

Batumi sunset -

Not so long ago, the World Bank conducted a study to determine which of the post-Soviet republics is easiest to do business in. Georgia took the 15th position in the ranking.

The Georgian economy is based on Agriculture, construction and tourism business. The main export commodities are scrap metal, mineral water, wines, citrus fruits, ore, nuts, transport.

Today, many Russians emigrate to Georgia to open and run their own business there. The opening of any enterprise always begins with registration. Here, both visiting citizens from other countries and stateless persons have the right to register as an individual entrepreneur.

To register a business, the above individuals must apply to the Houses of Justice or to the offices of the National Agency of the State Register with documents confirming their identity and an application.

In addition to these documents, you will need to provide an individual address and email.

As a legal address, you can use any real estate existing in Georgia, registered in the state register.

In the absence of an individual address, you can provide a document indicating the consent of the owner of the property, or the right to use this property (temporary use, rent, etc.).

Registration procedure

Comparing Georgia with other countries former USSR, then the procedure for registering an enterprise is very simplified here. To register your business, you only need to go through two steps:

1. Payment of the registration fee and registration of the company, obtaining identification code, a document confirming the fact of registration with the tax office and a certificate of state registration. All this takes no more than one day.
2. Opening a bank account is also carried out within one day.

It takes only two days to open a business in Georgia. Many Russians who have registered their business in this state note that the registration procedure here is one of the simplest and fastest.

Business types

The Georgian legislation provides for the following forms of business that Russians can organize:

• joint and several liability society;
• business partnership;
• limited partnership;
• cooperative;
• branch of the enterprise.

The most common form is LLC.

Documents required for company registration

An application for registration in the register is submitted to the court. The application must contain the following information:

• company name;
• the address where the company will be registered;
• type of organizational and legal form;
• information about the past founder.

If a limited partnership is registered, then it is necessary to indicate how much each of the contributors contributed, confirming the amount of the contribution.

When registering an LLC, the following is required:

• information about authorized capital documented;
• information about the contribution of all members;
• personal data of directors;
• certificates confirming the appointment of directors.

In addition, the application must be accompanied by the following documents:

• charter of the company;
• a document containing information on the assessment of the contribution (for institutions with non-monetary contributions);
• certificate of no criminal record for committed financial crimes.

The company can work on the basis of its own Charter, or an agreement of shareholders that outlined the rules for managing the company.

Georgian enterprises may not have their own seal, but when signing documents in organizations such as banks and tax authorities, it is desirable to have your own seal.

If documents are drawn up in two states, then notarization and legalization, or certification with an Apostille stamp, is necessary.

Limitations and problems

To carry out certain types of activities (medical, construction, etc.) in this country, it is necessary to obtain an appropriate license and permit.

Most often, these documents are required in the implementation of such activities that are related to the service lots of people, the existence of a risk to health and life, the use of state resources.

Currently, there is a lack of qualified and experienced specialists in Georgia. As a result of the ethnic war of the 1990s, the state's economy was in an unsatisfactory state for a long time, which led to the inability of universities to produce such specialists who could satisfy the current needs of the market.

Due to the small number of enterprises and the low activity of investors, many areas of activity suffer from a shortage of such specialists who would have sufficient experience in certain areas.

So, today this country is experiencing an acute shortage of brand managers and specialists who have experience in the construction of skyscrapers.

In recent years, there has been an increase in prices for Georgian real estate, so for many businessmen it is much more profitable to rent premises than to buy.

Besides, commercial real estate, as a form of business, has just begun to develop in the country, so the objects, most often, do not meet all the requirements of real estate segments.

All these factors should be taken into account by Russians who want to start a business in Georgia. When opening a company, you can easily select staff for basic positions, but certain problems may arise with the search for a specialist for non-standard positions.

Features of Georgian business

Russians who decide to open a business in Georgia should know some facts about doing business and working in this country.

• In Georgia, being late is considered the norm, so if for some reason you are late for a meeting by 15-30 minutes from the appointed time, then you should not worry about this.
• Almost every Georgian who runs any kind of business has a website for his company. Therefore, if you decide to open a business here, it is advisable to have a personal account at least on Facebook.
• If you decide to open your own business in Georgia, then try to learn the language of this country - this way you will earn respect for your efforts.
• The slowest workers here are builders and repairmen. If you were promised to hand over the work in a week, then multiply this period by three or five, and be patient.
• This Caucasian people is distinguished by a special craving for education. Thus, more than half of the population has a good education, and many of the Georgians studied abroad. Fluent English language here it is considered almost a matter of honor, so English is spoken very often in Georgia. On all signs in Tbilisi you can see inscriptions in Georgian, necessarily duplicated in English.

Thanks to low tax starts and insignificant government involvement in the economy, Georgia has become one of the most attractive countries in the world for doing business. Many Russians note that doing business here is much easier than at home.

Georgia is a geographically close country with established business, historical and cultural ties. When opening a company, entrepreneurs do not have to worry about the language barrier. The desire of the authorities to make the state attractive for investment has led to a significant simplification of the bureaucratic side of the issue.

Subject to the rules, opening a company in Georgia takes up to seven days, after which you can freely start working. In particular, it is beneficial to create a company in areas with zero VAT rates (standardly it is 18%). These include tour operator activity, electric power industry, international shipping, export and so on. The income tax rate is 15%, with dividends received by individuals or non-residents, a five percent share must be paid to the budget.

Business environment here is attractive and open: it can be safely called hospitable, like a country - cozy and bright. Registration of a company in Georgia can be carried out remotely, by proxy issued to a representative of interests. Any person can be a business owner, shareholder or head of an enterprise, regardless of citizenship or place of permanent residence.

The country is selected according to the following parameters:

• tax exemption for non-residents;
• absence in the "black lists";
• a good reputation that facilitates the opening of accounts in most countries of the world;
• no need to submit reports;
• income is not declared

• the need to have a permanent legal address in the country;
• notarization can only be carried out by a specialist from Georgia;
• capital or contributions must be evaluated upon receipt of a certificate (it must be attached to the registration documentation package);
• For sole proprietorships, the same rules apply as for traditional legal entities.

Also, the applicant must come up with and submit to the registration authority three company names. However, if there is a similarity with existing companies, even a significant one, there will be no problems (as in many Western jurisdictions) - you just need to fill out certain forms. It is impossible to say that Georgia is offshore, but it is possible to conduct profitable activities and carry out tax optimization in it no less profitable than in classical tax-free countries.

How to register a Georgian company

Registration of a company in Georgia differs little from Russian bureaucratic procedures - this is another plus of creating a company there. To “start the process”, you need to write an application and attach a package of documentation to it. It's standard is:

• copies of passports of the entrepreneur (if an individual entrepreneur is registered) or the founders of the company, as well as papers identifying the identities of shareholders and management;
• charter and decision on the appointment of the directorate;
• certificates of assessment of the contribution to the capital and receipt of payment of the registration fee;
• samples of signatures of owners, notarised power of attorney for representatives.

The application is filled in two copies. It must contain the full name of the organization (in the case of individual entrepreneurship, the name of the applicant), address, legal form. If the company is limited (in Georgia, you can create the same companies as, for example, in Russia), then you will need to indicate the size of the contribution of each owner. All documents are submitted to the tax authority, which is obliged to send a notification to the applicant after the end of registration.

Once the certificate has been received, you must:

• open a bank account: it is worth doing to make a capital deposit and then start full-fledged activity;
• register in commercial register;
• get a certificate of assignment of a tax number.

The most common form of business in Georgia is a company with limited liability. It can open sole member, it may be owned by several persons with management rights. The partnership is founded by at least two owners - and one of them will be fully responsible for the obligations.

Employees of the company "Prifinance" are ready to tell you in detail about the features of opening a company in Georgia and take care of all the troubles of creating a company.

In the last 10 years, Georgia has become an attractive country for investment. An important fact is that not only millionaires, but people with very modest financial capabilities can open a business in Georgia in 2020.

This state occupies the first lines of all international tables, highlighting how easy it is to start a business for a foreigner who wants to move to another country. In 2019, according to Doing Business, Georgia overtook such countries as Greece in the number of registrations of new companies.

In the Europe and Central Asia region, Georgia ranked highest, moving up to 6th place from ninth last year.

How did Georgia impress those who saw the views of Doing Business specialists?

• Ease of registration of any company.
• Minimal participation of state structures in the conduct of business of companies.
• Low level of corruption in the country.

Important: On June 21, 2019, the President of the Russian Federation signed a Decree on the ban on air traffic with Georgia. The document will come into force on July 8, 2019. The ban applies to all Russian airlines that previously operated direct flights to Georgia.

There is a law according to which the rules for doing business in Georgia are the same for both foreign citizens and local residents.

1. Registration of a company of any direction begins at the nearest agency state register, where it will be necessary to submit the required information and documentation about the newly opened enterprise.

Note. All documentation of the state register is in the open Internet access, anyone can get acquainted with it.

1. The company or enterprise is then registered with the House of Justice. Everything goes according to the principle of "LLC", that is, registration is carried out according to the principle of "one window". However, in order to register for VAT and obtain the status of a taxpayer in electronic version, you will have to write another application.

For most entrepreneurs, at this stage, the registration of the business ends. But there are some activities that require special permission:

• Healthcare.
• Construction.
• Means of communication.
• Energy.
• gaming business.

To start activities in the above areas, a license is required. When receiving it, the entrepreneur is not required to indicate the minimum amount of capital that he is going to invest in his business. That is, only the bank can request information about finances, other structures do not have the right to do so.

Note. In 99.9% of cases, neither foreign citizens nor local entrepreneurs have problems with business registration.

What kind of business to open to a foreigner

Most often, foreign businessmen of an average hand open:

• Restaurants cafes, bars, shops.

• Hotels, hotels, hostels.
• Schools, courses, etc. educational institutions. Moreover, the gap in the services offered is huge, from an autistic kindergarten to math courses or a ballroom dance school.
• Tailoring studio.
• travel companies.
• Rent of premises. Many foreigners buy apartments in cities with big amount tourists or students and then rent them out. The same thing happens with non-residential areas. That is, a room is bought where a shop, a hairdresser, etc. is equipped, and then it is rented out. (You can read it by following this link.)
• Firms for hiring workers and service personnel.

Wealthy businessmen open:

• Construction companies.
• Casino.
• Pharmacies.

Note. In order not to be disappointed, one should take into account the peculiarities of the temperament, character and habits of the citizens of the country in which it is planned to start a new business.

Tourism boom in Georgia

Georgia is experiencing a tourism boom. In 2019, twice as many tourists entered the country as people live there. That is, with a population of less than 4 million people, Georgia received more than 8 million guests a year. This is a very good indicator even for the countries of Europe, not to mention the Transcaucasus.

Of course, with such an influx of visitors, the tourism business in Georgia cannot be unprofitable and it has room to develop.

Important! Since it became clear that Russians are treated well in Georgia, the flow of tourists from Russia is growing exponentially, which means that there is a need not only for businessmen, but also for Russian-speaking workers in 2020:

• guides.
• administrators.
• Coaches (for example, in ski resorts), etc.

The dynamics of the entry of Russian tourists to the countries of the Caucasus in 2013 - 2017 (thousand people)

Demand creates supply, and this has made the tourism business in Georgia the most attractive for Russians. (You can read the article on this by following this link.)

Business taxes

Business taxes in Georgia depend on the status assigned to a particular project. More details can be found by following this link.

Tax rates in Georgia

Microbusiness and small business

Micro and small businesses are eligible for preferential tax treatment in 2020. Thus, micro-businesses, in general, are not subject to income tax, and small businesses in Georgia are subject to it in a preferential regime.

Business status is defined as follows:

A micro businessman does not pay taxes and is exempted from using a cash register.

• Small business. The status of a small business owner is assigned to an individual, economic activity which for the current calendar year brought income approaching 100 thousand lari.

Small business income tax - 5% per year. However, if a businessman submits documents confirming that 60% of his profits went to the cost of improving the business, the tax is reduced to 3% per year.

Note. When taxed individual entrepreneurs, salaries of employees are not considered business improvement expenses and are not taken into account when income tax is reduced from 5% to 3%.

When can the business status be changed?

The status of "micro business" changes to the status of "small business" in cases where:

1. The annual income exceeds 30 thousand lari.
2. If a micro businessman's inventory balance exceeds GEL 45,000.

The status of "small business" changes to the status of "medium/large business" in cases where:

1. The annual income exceeds 100 thousand lari.
2. At the end of the reporting year, the owner of a small business has a balance of inventory exceeding 150 thousand lari.

To obtain the status of a micro or small business, you should contact any service center or tax authority in the country.

Note. If an enterprise was sanctioned three times in a year for not using cash register, an entrepreneur may be banned from doing business for some time.