Doing Business in Georgia
In a world of different cultures, it’s good to have advisors who are consistent everywhere.
RSM International is one of the largest networks of independent audit and consulting firms in the world. RSM International is represented in 90 countries and brings together the talents of 32,500 individuals. RSM member firms are driven by a common vision of providing high quality professional services to ambitious and growing organisations.
Foreword This guide has been prepared to assist those interested in doing business in Georgia. It is intended as a general guide to answer certain key questions that may arise. As legislation and business practices are subject to change and reinterpretations, it is sensible to seek local advice from appropriately qualified professional sources to deal with specific matters. The material included in this guide was compiled on the basis of data and information available at the beginning of 2012.
About Capto Group and RSM International Capto Group is the Georgian member firm of RSM International (RSM) and may be contacted through any of the member and correspondent RSM firms around the world. The firm’s main service lines include: assurance and business advisory, tax and corporate services and valuation. Capto Group offers financially focused services from four main offices in Tbilisi and branch offices in Batumi, Telavi, Kutaisi and Poti. Capto Group is rated in the top 10 of professional audit firms operating in Georgia. We have 2 partners with exceptional technical skills and in-depth knowledge of the market and over 30 professional staff. RSM International is one of the largest networks of independent accounting and consulting firms in the world. Each firm is independently owned and managed and practices in its own right. Member firms of RSM International are driven by a common vision of providing high quality professional services, both in their domestic markets and in serving the international professional service needs of their client base. Member firms have a common work ethic of innovative thinking to develop and deliver high quality and timely results for their clients, backed by high skills and world class standards. RSM International has member firms in over 90 countries and is represented in each of the top 40 major business centres throughout the world. The combined organization has more than 32,500 staff in more than 700 offices, placing it amongst the top six international accounting organizations world-wide.
Orthodox monastery Previous image: Tsminda Sameba, near the KazbegiGergeti village, under the Kazbek Mountain Cover image: Bells, Dzhvari Monastery
Buenos Aires
Contents Message from the Partner
5
1
Country overview
6
Location 6
Political environment
Legal system
7
Social environment
8
7
Economy
9
2
Types of business entities
12
Establishing an entity
12
Types of companies
12
3
Foreign exchange controls
14
4 Taxation 15
Georgian tax system overview
15
Corporate tax system
16
5
Foreign investment climate
21
Investment climate
21
Restriction on foreign investment
21
Investment incentives
21
Guarantees and rights
21
6
Useful Infomation
22
Working hours
22
Georgian international telephone code
22
Useful links
23
Contacts
24
DOING BUSINESS IN GEORGIA | 3
4 | DOING BUSINESS IN GEORGIA
Bridge of Peace, pedestrian bridge connecting Old Tbilisi with the new district
Message from the partner This Doing Business in Georgia Guide has been especially prepared by our firm to provide an overview of Georgia’s political, social and economic environment, as well as some details on the tax and legal environment. I very much hope that this Guide will help you to build a better understanding on how to start and manage business in Georgia. Georgia is growing to be more attractive for domestic and foreign investment. The rapid changes that have taken place in our country’s political and economic environment have made Georgia the leader in the region in undertaking transition towards democracy, transparency and an open market. Capto Group has been providing professional assurance and advisory services in the Georgian market since 2008. As the member firm of RSM International, the sixth largest network worldwide, we are committed to fully complying to the standards and practices set out by our profession and establishing the exemplar of professional conduct in our market. Our head office is located in Tbilisi and we have branches in Batumi, Poti, Kutaisi and Telavi, together employing a total of 35 professional staff. We welcome you to Georgia and will be happy to provide support and solutions to your business.
Giorgi Kvinikadze Managing Partner
DOING BUSINESS IN GEORGIA | 5
1
Country overview
The nation of Georgia (Georgian: sak’art’velo) was first unified as a kingdom under the Bagrationi dynasty in the 9th to 10th century, arising from a number of predecessor states of ancient Colchis and Iberia (12-10th centuries B.C.) The kingdom of Georgia flourished during the 10th to 12th centuries. Georgia was annexed several times, but it was finally occupied by the Russian Empire in 1801. After a brief bid for independence with the Democratic Republic of Georgia of 1918–1921, from 1922 to 1936 formed the Georgian Soviet Socialist Republic until the dissolution of the Soviet Union. Georgia declared its independence on 9 April 1991. Georgia is famous for its hospitality and cuisine.
Location Georgia is a picturesque country located in south eastern Europe; it shares its borders with Turkey and Armenia in the south, Azerbaijan in the east and Russia in the north. The western coastline of Georgia is bordered by the Black Sea. Georgia is truly a Eurasian country, situated at the juncture of Western Asia and Eastern Europe. The area of Georgia is 69 700 sq. km. Georgia is known as the mountainous country; the Caucasus Mountains extend along the northern, central and southern side whilst the Lesser Caucasus Mountains lie on the borders of Turkey and Armenia and connect to the Greater Mountainous range of Caucasus. It is because of these ranges that regions of Georgia continue to have many linguistic differences. •
Mt. Kazbek: The highest peak fully contained within Georgia’s border is about 16,558 ft.
•
Mt. Elbrus: Europe’s highest point stands at 18,841 ft and is nestled in the Caucasus Mountain Range, just beyond the northern border of Georgia.
•
Mt Shkhara: The highest peak in Georgia stands at 17,064ft and straddles the northern border.
6 | DOING BUSINESS IN GEORGIA
The Kolkhida Lowlands face the Black Sea in the western part of the country. The Kolkhida lowlands are surrounded on the north by the southern Greater Caucasus Mountain Range and on the south by the northern Lesser Caucasus. East of this region, is the Likhi Mountain Range that links the Greater and Lesser Caucasus. The Kura river, passes through the north eastern part of the Turkey, crossing the eastern plains of Georgia that ascend into the Caspian Sea. The Rioni River meanders along the western part of Georgia. It originates in the Greater Caucasus and resides into the Black Sea along the port of Poti.
Political environment Georgia is a Presidential Republic. A President is elected for a five-year term. Mr Mikheil Saakashvili serves as the current President of Georgia. He won his second and current term by direct popular vote on 5 January 2008. Legislative power is exercised by Parliament. . There are 235 members elected by popular vote for a four-year term. The last parliamentary was held in May 2008 and resulted in an overall majority for the United Movement Party led by Mikheil Saakashvili. The current Prime Minister is Gilauri appointed on 6 February 2009.
that are election National Mr Nika
Shortly after independence, Georgia became a member of the United Nations (UN) and the International Monetary Fund (IMF) in 1992 and the European Bank for Reconstruction and Development (EBRD) in 1994. Georgia joined the Council of Europe in 1999 and the World Trade Organization (WTO) in 2000.
DOING BUSINESS IN GEORGIA | 7
Legal system Georgia is a civil law country. The Constitution, adopted in 1995, sets out the structure of the national government, as well as its powers and functions. The powers of government are divided into three branches – legislative, executive and judicial. The court system in Georgia has three branches: Courts of First Instance (District or City Courts), Appellate Courts and the Supreme Court. First Instance Courts have jurisdiction over all civil, criminal and administrative cases. Decisions from First Instance Courts may be appealed to the Appellate Courts, and from there to the Supreme Court. The Constitutional Court of Georgia is the sole body of constitutional jurisdiction of Georgia. As an alternative to litigation, Georgia allows for third party arbitration. Georgian law also allows foreign companies to include provisions in their contracts (including those with Georgian entities) that allow for arbitration by international arbitration institutions.
Social environment The population of Georgia is estimated to be 4.4 million as of January 2010. Georgian is the official language of Georgia and is spoken by 71% of the population. Most Georgians also speak Russian and feel comfortable conducting business in the Russian language. The majority of Georgian businessmen speak English. Armenian is spoken by 7% of the population, and Azeri is spoken by 6% of the population. Approximately 84% of Georgians are Orthodox Christian. Other religious groups include Muslims (9.9%), Armenian Apostolic (3.9%) and Catholics(0.8%).
8 | DOING BUSINESS IN GEORGIA
Economy General Georgia’s economy is mainly built on agricultural cultivation of citrus fruits, tea, grapes, and hazelnuts. Georgia posses a manganese and copper mining industry. Other industries present in Georgia include aircraft manufacturing, bottled water, wine production, chemicals, electric motors, electric welding equipment, fuel re-export, equipment (automobiles, trucks, tractors), machine tools, machinery for food packing, tower cranes, machinery for food packing, steel, shoes, textiles, and wood products. The country suffices its needs through the goods imported from other nations like fuels, machinery and parts, transport equipment, grain, pharmaceuticals and many other items. The goods that are supplied to other regions include commodities like scrap metal, machinery, chemicals, fuel, citrus fruits, tea, wine. Georgia imports nearly all its natural gas and oil products. The largest energy producing source is hydropower. Currently, Georgia is privatizing the energy sector. The electricity distribution network was privatized in 1998, and the government began the privatization of hydro-electric stations in 2006. Georgia’s main export partners are Turkey, United States, Azerbaijan, Ukraine and Armenia. Exports include wine, mineral water, ores, vehicles, fruits and nuts. Georgia’s main import partners are Turkey, Russia, Ukraine, Germany and Azerbaijan. Imports include goods, machinery and equipment, fuels, chemicals, metals and foodstuffs. The Government has adopted a policy of free international trade, and has been a full member in the World Trade Organization since 2000.
DOING BUSINESS IN GEORGIA | 9
Reforms Following the Rose Revolution of 2003, Georgia has undertaken a series of progressive reforms including anti-corruption efforts, reforms of labour and tax codes, and improvements to the general infrastructure of the country. The reforms to the Georgian economy have resulted in a large influx of foreign direct investment, positive GDP growth and curtailment of inflation. The World Bank’s ‘Doing Business 2010’ report regards Georgia as the 11th easiest economy in which to do business throughout the world, up from 16th in 2009. The report notes Georgia’s commitment to economic reform over the last few years. Significant economic reforms were undertaken over the last few years, including: •
Simplifications of regulation procedures;
•
Modernized system of permits and licenses;
•
Accelerated and transparent privatization policy;
•
Support of foreign direct investments;
•
Liberal tax policy;
•
Free Economic Zones;
•
Liberal labour Code;
•
Liberal trade regimes.
Transit pipelines Georgia plays the important role of a transit state in the region. Three pipelines currently exist: •
The Baku-Supsa pipeline runs 814 km from Baku to Supsa (444 km in Azerbaijan and 370 km in Georgia) and transports “early oil” from the Caspian Sea region operated by the AIOC (Azerbaijan International Oil Company) consortium off the coast of Azerbaijan. Initial line capacity is 115,000 barrels per day but could be increased to approximately 200,000 barrels per day with additional pumping stations. There are four 40,000 ton storage units at Supsa. Kazakh gas is also transported through the Baku-Supsa pipeline.
10 | DOING BUSINESS IN GEORGIA
•
The Baku-Tbilisi-Ceyhan (BTC) oil pipeline extends 1750 km across Azerbaijan, Georgia, and Turkey and is designed to transport up to one million barrels of Azeri oil per day. Oil is transported via Georgia to the Turkish port of Ceyhan.
•
The South Caucasus Pipeline (SCP) System project was completed in late 2006. The initial capacity of the pipeline is 8.8 billion cubic meters (bcm) of gas per year, and after 2012 its capacity could be expanded to 20 bcm per year. As part of the transit payment, Georgia will receive 5% of the volume of natural gas transited from Azerbaijan to Turkey.
Transportation routes Rail and ferry connections link the Georgian Black Sea ports with Turkmenbashi Port (Turkmenistan) and Aktau Port (Kazakhstan). Poti Port operates as a trade zone. This makes Georgia a natural transit point for shipments bound for Central Asia. Georgia has a railway network of 2,554 kilometres of tracks. Direct rail connections exist between Georgia and Armenia, and between Azerbaijan and Russia. Harmonization of the certification and technical standards of Georgia with those of the EU, recent drastic anti-corruption measures, improvements in the customs administration, and the introduction of the “green corridor” regime with Turkey has resulted in an increase in the flow of road transport through Georgia. Georgia operates airports in Tbilisi, Kutaisi (Kopitnari), Senaki and Batumi. Georgia has two ports on the Black Sea: •
Poti Port is occupied by modern cargo handling facilities and meets European standards. In 2003, the port obtained the ISO 9001:2000 Quality Management System Certificate and has also been awarded an IQNET Conformity Certificate. The port has permanent railway-ferry connections with ports of Ilichevsk (Ukraine), Samsun (Turkey), Varna (Bulgaria), and Kavkaz (Russia), and is linked by direct motorway ferry lines to Novorossisk (Russia), Burgas (Bulgaria), and Rize (Turkey).
•
Batumi Port has an annual handling capacity of 15-18 million tons oil and 2.5 million tons of dry cargo.
DOING BUSINESS IN GEORGIA | 11
2 Types of business entity Establishing an entity Under the one-window principle established in 2005, registration is conducted with the National Agency of Public Registry, and can be completed within 2-3 days. For sooner processing, an urgency fee is required. Documents prepared overseas must be apostilled by the appropriate government body (or legalized through a Georgian embassy, if the head office or parent company is not in a state part of the Hague Convention on Abolishment of Legalisation for Foreign Public Documents). In addition, documents prepared in foreign languages will need to be officially translated and notary approved into Georgian.
Types of companies The common legal types of businesses in Georgia are: •
Limited liability companies (LLCs)
•
Joint stock companies (JSCs)
•
General partnerships, which are limited to participation by individuals
•
Limited partnerships, where some partners have limited liability and the other partners
•
Cooperatives, which aim to serve the common interests of their members rather than receiving profits.
Limited liability companies (LLCs) LLC is a legal entity with capital divided into shares, and the liability of its owners is limited to the nominal value of their shares. There is no minimum charter capital requirement for a LLC. LLC may have a maximum of 50 shareholders. Unless there are restrictions included in the Charter, shares in a LLC may be freely transferred.
Registration procedures The articles of association of an LLC is its Charter. The charter must be signed by its founding partners and notarized. Incorporation will take a maximum of three days after the submission of all required documents are filed with National Agency of Public Registry.
12 | DOING BUSINESS IN GEORGIA
Capital structure There is no minimum capital requirement for LLC. A LLC may have a maximum of 50 partners. The meeting of shareholders must be held at least once a year. Decisions are made by a simple majority of votes. It is not necessary to hold the meeting if all partners send their written consent on all issues to be considered.
Liquidation LLC is liquidated if owners of more than 50% of its authorized capital agree to liquidate the LLC.
Joint stock companies JSC is a legal entity whose share capital is divided into a specified number of shares of equal nominal value. The liability of its shareholders is limited to the nominal value of their shares. There is no minimum charter capital requirement for a JSC. JSC may have multiple classes of shares carrying different rights for the shareholders of each class. The legal framework for JSCs is similar to that for LLCs. Specifics features are: •
Corporate bodies: The supreme managerial body of JSC is the Shareholder’s Meeting. A Shareholder’s Meeting is not required if decisions are exercised by a shareholder holding more than 75% of the JSC’s authorized capital. Operational management is delegated to the JSC’s director or directors, who may be of any nationality. JSCs must also have a Supervisory Board and an Independent Auditor.
•
Mandatory share purchase: A shareholder (or group of shareholders acting together) who purchase shares resulting in control over more that 50% of the voting shares in a JSC must prepare a tender proposal to redeem all remaining shares at fair value. A shareholder acquiring more than 95% of the shares of a JSC has the right to redeem the shares of the other shareholders at fair value.
Branches and representative offices Branches and representative offices are not legal entities and operate in Georgia on behalf of the foreign (or local) companies that they represent. The activities of a representative office are limited to representing the interests of its head office. A branch may perform some or all of the normal commercial activities of the entity to which it belongs.
DOING BUSINESS IN GEORGIA | 13
3 Foreign Exchange Controls Georgia’s currency regime is based on floating exchange rate principles. Intervention from the National bank of Georgia is possible to prevent excessive exchange rate fluctuations on the currency market. Georgia has liberal currency regulations. Local or foreign individuals and entities are free to buy or sell foreign currency without any limitation. Transfer from a resident or non-resident individual’s bank account is not subject to limitation. Only resident individuals are obliged to provide the bank with appropriate documentation (e.g. contract) under which the transfer is to be done. Georgian law does not impose any limitation on lending from foreign banks.
14 | DOING BUSINESS IN GEORGIA
4 Taxation Georgian tax system overview Due to reforms implemented in the tax system in 2005, Georgian tax jurisdiction is one of the most liberal in Europe. The number of taxes and rates were significantly reduced from 21 to 6 (2004-2008). according to the Georgian Tax Code, currently, the number of taxes is only 6, including 5 state taxes and 1 local tax: State Taxes: Personal Income tax, Profit tax, Customs tax, VAT and Excise tax; Local Tax: Property tax. In 2007, important changes made in the Tax Code promoted the changes of tax system. Namely, social tax was replaced by a unified income tax (25% in 2008; 20% since 2009), and the profit tax rate was reduced from 20% to 15%. Tax rates on dividends and interest were reduced from 10% to 5% in 2005.. In addition, significant procedural and institutional reforms were made – simplified system of tax disputes discussion was established, which will make the country more attractive for entrepreneurs and foreign investors. It is likely that further liberalization of tax system will be taken. The New Georgian Customs Code has established simplified customs procedures. Customs Tariffs Reform has significantly simplified and sharply reduced the costs connected to foreign trade. Import tariffs were abolished on approximately 90% of products and only 3 tariff rates (0%, 5%, 12%) exist, whereas previously there had been 16. Georgia sets custom taxes on only several kinds of agricultural goods and constructing materials. In addition, there are no quantitative restrictions (quotas) on imports and exports. The creation of Free Industrial Zones (FIZ)– A decision on the establishment of free industrial zones (FIZ)—was adopted for the creation of a more favourable environment for Foreign direct investment (FDI), which drives new technologies, employment generation and export growth. According to the law on Free Industrial Zones, an FIZ can be created on more than 10 hector territory on the basis of the government’s decision or by the initiative of physical person/legal entity. The GoG takes final decision on FIZ creation. A more liberal, special taxation regime applies to companies acting within the zone. They are free from profit, property and value added taxes. The import of goods from the free industrial zone to the other territories of Georgia (outside the free industrial zone) and the export of foreign goods to the free industrial zone are free from customs tax.
DOING BUSINESS IN GEORGIA | 15
Establishment and operation of FIZ-s will facilitate as regional as well as country’s economic development. Georgia has concluded double taxation treaties with 33 countries and has bilateral treaties on investment promotion and protection with 32 countries. There is a possibility of a Free Trade Regime with the European Union in the near future.
Corporate tax system Companies Georgian entities and foreign entities doing business in Georgia through a permanent establishment are liable for corporate income tax. The standard rate is 15%.
Dividends Companies must deduct withholding tax from dividends paid to individuals and foreign entities not having a permanent establishment in Georgia at a rate of 5%. The rate will reduce to 3% in 2013 and 0% in 2014. A lower rate may apply under a relevant tax treaty. Dividends paid between resident companies are exempt from income tax.
Residents and non-residents A resident enterprise is any legal entity established under the law of Georgia, or that has its place of effective management in Georgia. Resident entities are liable to Georgian tax on their worldwide income. Foreign taxes should be available for credit against Georgian tax liabilities, up to the amount of Georgian tax payable on the foreign income. Foreign entities are liable to Georgian tax only on income from sources in Georgia. In broad terms, income will have a source in Georgia if: •
The income arises from activities performed or property located in Georgia; or
•
In the case of passive income (e.g., dividends, interest and royalties), financial services and insurance services, the income is paid by a resident of Georgia.
16 | DOING BUSINESS IN GEORGIA
Consolidation There is no system of group taxation in Georgia. Members of a group must file separate tax returns. There are no provisions to allow losses to be offset against the profits of another group member.
Permanent establishments The domestic definition for a permanent representation essentially adopts the definition for permanent establishment found in the OECD Model Tax Convention. The taxable income of a permanent establishment is determined and taxed in the same manner as that of resident companies. A foreign company that earns income from the provision of services within Georgia is subject to 15% withholding tax if the company does not have a permanent establishment in Georgia. However, relief may be available under a relevant tax treaty. A non-commercial representative office established to engage in liaison type activities will generally not be subject to profit tax.
Tax reporting The reporting year for companies follows the calendar year.
Taxable profit Taxable profits are defined to be the difference between a taxpayer’s gross income and deductible expenses. Gross income encompasses all revenues received by a taxpayer from all economic acts unless the revenues are expressly exempted under the law. Deductible expenses encompass all necessary and documented expenses that are directly related to conducting business or earning profit, unless a specific provision in the law restricts the deduction.
Accounting for income and expenses The taxpayer may use either the cash or accrual method of accounting for tax purposes as long as one method is applied consistently throughout the year. However, the taxpayer has to use the same accounting for both financial reporting and tax purposes.
DOING BUSINESS IN GEORGIA | 17
Exempt income Dividends derived by a Georgian entity (including dividends from foreign companies) are tax exempt. Interest received from government bonds and gains derived from the sale of those bonds are tax exempt. Gains from the sale of bonds when more than 25% of their issue have been traded on the Georgian Stock Exchange for the last two years are tax exempt. Interest received by a non-financial institution from a licensed financial institution is tax exempt.
Deductible expenses Properly documented expenses that are necessarily incurred in the furtherance of a taxpayer’s business activities should be deductible, unless a specific provision in the law says otherwise (refer Non-deductible expenses. The following are the typical expenses that are not deductible for corporate income tax purposes: •
Expenses not related to a taxable business or connected with the derivation of tax income.
•
Expenses for charitable donations 10% of taxable profit
•
Representation expenses are limited to 1% of the gross income of the reporting year.
Accounting for income and expenses The taxpayer may use either the cash or accrual method of accounting for tax purposes as long as one method is applied consistently throughout the year. However, the taxpayer has to use the same method of accounting for both financial reporting and tax purposes. Dividends derived by a Georgian entity (including dividends from foreign companies) are tax exempt. Interest received from government bonds and gains derived from the sale of those bonds are tax exempt. Gains from the sale of bonds when more than 25% of their issue have been traded on the Georgian Stock Exchange for the last two years are tax exempt. Interest received by a non-financial institution from a licensed financial institution is tax exempt.
18 | DOING BUSINESS IN GEORGIA
Non-deductible expenses The following are the main items that are not deductible for corporate income tax purposes: •
Expenses not related to a taxable business or connected with the derivation of tax income.
•
Expenses for charitable donations are limited to 10% of taxable profit
•
Representation expenses are limited to 1% of the gross income of the reporting year
Value added tax(VAT) Georgia operates the input-output model of VAT. Persons subject to VAT deduct the VAT paid on their inputs from the VAT charged on their sales and account for the difference to the tax authorities. A taxpayer is required to register for VAT if their sales for the 12 preceding calendar months exceeded GEL 100,000, or if they produce or import excisable goods. A taxpayer must also register if they will make a one- off taxable transaction in the course of economic activity in an amount exceeding GEL 100,000. Taxpayers whose revenues are below the GEL 100,000 threshold may voluntarily register as VAT payers. The standard rate of VAT on domestic sales of goods and services and the importation of goods is 18%. Exported goods and related services are VAT exempt with the right to credit input tax. Since 1 January 2011, the accounting period for VAT is the calendar quarter. A taxpayer is required to submit the VAT return and pay the respective tax to the local tax authorities within 15 days after the end of the accounting period.
DOING BUSINESS IN GEORGIA | 19
Property (and land) tax Enterprises must submit property and land tax declarations before 1 April of the year following the year for which taxes are being assessed: •
Property tax is paid in two instalments. An advance payment is made on 15 June, equal to the property tax payable for the previous year. The balance is then due before 1 April of the following year, when the property tax return for the year is filed.
•
The amount of land tax is subject to assessment by the authorities and must be paid before 15 November.
Withholding taxes With the exception of employers operating in a Free Economic Zone, employers are required to withhold personal income tax at source on a monthly basis from their employees’ salaries. The taxes are remitted to the state budget on the same day that they are deducted. The monthly personal income tax return should be submitted by the employer before the 15th day of the following month. Payments of interest are generally subject to 5% withholding tax, although a number of exemptions exist. The tax rate on interest will reduce to 0% from 2014. Dividend payments (except to another Georgian entity) are subject to 5% withholding tax. This will reduce to 3% for 2013 and to 0% from 2014. Payments of income to oil and gas subcontractors are subject to 4% withholding tax. Payment to non-residents for international transportation and international communications is subject to 10% withholding tax. Payments to non-residents for insurance are subject to 0% withholding tax. Payments to non-residents that are not covered by the rates indicated above are subject to 15% withholding tax. Withholding tax rates for non-residents may be reduced under a relevant tax treaty.
20 | DOING BUSINESS IN GEORGIA
5
Foreign Investment Climate
Schonbrunn Palace, Vienna
Investment climate Georgia encourages foreign trade and investment, and laws allow foreigners to purchase businesses and property, repatriate revenue and profits, and receive compensation if property is.
Restrictions on foreign investment Foreign enterprises and individuals are permitted to own up to 100% foreign ownership of the capital of Georgian companies. There are some limitations on the activities that may be conducted, however, and foreign investment in the defence and security sectors is not permitted
Investment incentives Georgia offers incentives for businesses located in free industrial zones (FIZs), and for entities established as an International Financial Company, Free Warehouse Enterprise or International Enterprise.
Guarantees and rights Under the Law on Promotion and Guarantees of Investment Activity, foreign investments cannot be subject to nationalization, confiscation, expropriation, requisition, or any other measure of similar effect, except in cases of natural disaster or an epidemic. In such cases (damages, lost profits, and moral damages), fair compensation will be provided to the investor no later than four months after the incident. Foreign investors are guaranteed the right to repatriate freely any funds in convertible currency after payment of appropriate taxes and other fees. If a foreign enterprise is liquidated by the foreign partner, assets leaving Georgia are subject to payment of all applicable taxes and duties. Disputes between an investor and a state authority are to be brought before either Georgian courts or before international mediation courts.
DOING BUSINESS IN GEORGIA | 21
6
Useful information
Working hours Government office opening hours are usually 1000-1800 (from Monday till Saturday). Private sector offices are usually open on Saturdays. 7.2. Georgian Public & Bank Holidays: •
Jan 1-2 New Year’s Day
•
Jan 7 Orthodox Christmas
•
Jan 19 Epiphany (Orthodox)
•
Mar 3 Mother’s Day
•
Mar 8 Women’s Day
•
Apr 9 National Unity Day (Victory Day)
•
May 26 Independence Day
•
Aug 28 Mariamoba (Orthodox Assumption)
•
Oct 14 Svetitskhovloba (Georgian Orthodox Festival)
•
Nov 23 Giorgoba (St George’s Day)
•
There are Orthodox Easter Holidays as well, that vary every year
Georgia International telephone code The international country calling code of Georgia is +995, preceding the city codes of the country. Use the same dial instructions in the case of Mobile Numbers: Country Code + mobile code + number.
22 | DOING BUSINESS IN GEORGIA
Useful links Parliament of Georgia – www.parliament.ge President of Georgia – www.president.gov.ge Ministry of Finance of Georgia – www.mof.ge Ministry of Justice of Georgia – www.justice.gov.ge National Agency of Civil Register – www.napr.gov.ge Ministry of Education and Science – www.mes.gov.ge Ministry of Internal Affairs –www.police.ge Ministry of Foreign Affairs – www.mfa.gov.ge Supreme Court of Georgia – www.supremecourt.ge Privatization / Ministry of Economic Development – www.privatization.ge Georgian Statistics – www.statistics.ge National Bank of Georgia – www.nbg.gov.ge Tbilisi City Hall (Municipality) – www.tbilisi.gov.ge
DOING BUSINESS IN GEORGIA | 23
Contact Use the contact details below to be put in contact with the Capto Group professional best suited to meet your needs.
International Contact Partner Giorgi Kvinikadze E giorgi@capto.ge
Capto Group 67 Agmashenebeli Avenue Tblisi T +995 32 2 55 8899 F +995 32 2 95 1162
www.capto.ge
24 | DOING BUSINESS IN GEORGIA
Notes
Notes
The Georgian Military Road - major historic route through the Caucasus mountains
DOING BUSINESS IN GEORGIA | 27
RSM International Executive Office 11 Old Jewry London EC2R 8DU United Kingdom T: +44 (0)20 7601 1080 F: +44 (0)20 7601 1090 E: rsmcommunications@rsmi.com www.rsmi.com RSM is the brand used by a network of independent accounting and advisory firms each of which practices in its own right. The network is not itself a separate legal entity of any description in any jurisdiction. The network is administered by RSM International Limited, a company registered in England and Wales (company number 4040598) whose registered office is at 11 Old Jewry, London EC2R 8DU. The brand and trademark RSM and other intellectual property rights used by members of the network are owned by RSM International Association, an association governed by article 60 et seq of the Civil Code of Switzerland whose seat is in Zug. Š RSM International Association, 2012 28 | DOING BUSINESS IN GEORGIA