Georgia
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WHY GEORGIA?
Georgia is Located at the crossroads of Eastern Europe and Western Asia, Georgia offers a unique blend of rich history, diverse culture, and strategic importance. The country is bordered by the Black Sea to the west, Russia to the north, Azerbaijan to the southeast, Armenia to the south, and Turkey to the southwest. Known for its stunning landscapes, including the Caucasus Mountains and lush vineyards, Georgia provides a vibrant and dynamic environment that appeals to businesses and tourists alike. The country’s distinctive culture, with its own language, cuisine, and traditions, along with significant recent economic reforms, make Georgia an attractive destination for investment and trade.
Geographical Overview
Location: Situated at the crossroads of Europe and Asia, Georgia borders the Black Sea to the west, Russia to the north, Azerbaijan to the southeast, Armenia to the south, and Turkey to the southwest.
Natural Features: The country is known for its diverse geography, including the majestic Caucasus Mountains, fertile valleys, and scenic coastline along the Black Sea. This varied landscape supports a range of economic activities from agriculture to tourism.
Cultural and Historical Significance:
Cultural Heritage: Georgia boasts a rich cultural heritage with a unique language (Georgian), ancient traditions, and distinctive cuisine. The country’s history dates back to antiquity, with influences from various civilizations including Greek, Roman, Persian, and Ottoman.
Tourism: Historical sites such as the ancient capital Mtskheta, the cave city of Uplistsikhe, and the picturesque town of Batumi attract tourists from around the world. The country’s wine-making tradition, which dates back over 8,000 years, is also a significant draw.
Economic Reforms and Growth:
Economic Development: Over the past two decades, Georgia has undergone substantial economic reforms aimed at improving its business environment. The government has focused on deregulation, reducing bureaucracy, and implementing investor-friendly policies.
International Recognition: Georgia’s economic reforms have been recognized internationally, with the country receiving high rankings in global ease of doing business indices and attracting foreign investment.
ADVANTAGE
Georgia’s strategic location, favorable economic policies, and simplified business environment provide several advantages for investors and businesses:
Trade Strategy
Strategic Location: Georgia’s position along major trade routes connecting Europe and Asia makes it a crucial transit hub. The country’s location provides access to significant markets in the region, enhancing its role in global trade.
Infrastructure: The country has invested in modernizing its infrastructure, including transport networks and logistics facilities. Key projects include the Baku-Tbilisi-Kars railway and the expansion of the Port of Poti.
Trade Facilitation: Georgia has streamlined its customs procedures to facilitate trade. Efforts to reduce trade barriers and simplify administrative processes make it easier for businesses to engage in international trade.
Free Trade Agreements (FTAs)
European Union (EU): Georgia’s Association Agreement with the EU includes a Deep and Comprehensive Free Trade Area (DCFTA), providing access to the EU market and aligning Georgian standards with European regulations.
China: The FTA with China enhances trade relations with one of the world’s largest economies, providing opportunities for Georgian businesses to export goods and services to China.
Turkey: The FTA with Turkey supports trade and investment between the two countries, reducing tariffs and improving market access.
EFTA (European Free Trade Association) Countries: The agreement with EFTA countries includes Switzerland, Norway, Iceland, and Liechtenstein, providing additional market access.
Robust Economy and Currency Stability
Currency: Georgia’s national currency is the Lari (GEL). The country does not impose currency controls, allowing for free movement of capital and foreign exchange.
Economic Stability: The Georgian government has implemented policies to ensure economic stability and growth. The country has experienced steady economic growth, driven by reforms and increased foreign investment.
Foreign Direct Investment (FDI): Georgia offers a favorable investment climate with incentives for foreign investors, including tax breaks and guarantees on property rights.
Skilled Workforce
Education and Training: Georgia has made strides in improving its educational system and vocational training programs to develop a skilled workforce. Universities and technical institutions are focused on meeting the needs of a modern economy.
Labor Market: The country benefits from a relatively low-cost, well-educated labor force, which is attractive to businesses seeking to establish operations in the region.
Centrality
Trade Routes: Georgia’s central location along key trade routes enhances its importance as a transit and logistics hub. The Baku-Tbilisi-Ceyhan (BTC) pipeline and the South Caucasus Pipeline (SCP) are critical infrastructure projects that underscore the country’s strategic position.
Economic Integration: The country’s integration into regional economic networks and its participation in various international organizations enhance its economic significance.
SIMPLE TAX REGIME
Georgia’s tax system is designed to be transparent and business-friendly, making it an attractive destination for investors and businesses:
Corporate Tax: Georgia uses an “Estonian model” of corporate taxation where profits are not taxed until they are distributed. The standard rate of 15% applies to distributed profits, while reinvested profits are not subject to tax.
Personal Income Tax: Personal income is taxed at a flat rate of 20%, simplifying the tax regime for individuals.
Value Added Tax (VAT): The standard VAT rate is 18%. There are reduced rates for specific goods and services, such as certain medical supplies and educational materials.
Capital Gains Tax: Georgia does not impose capital gains tax, which is advantageous for investors and businesses engaged in asset transactions.
Dividend Distribution: Dividends are generally tax-free, which benefits shareholders and enhances the attractiveness of Georgia as an investment destination.
Tax Incentives: New businesses may benefit from tax incentives, including reduced rates and exemptions during their initial years of operation. The government offers various incentives to attract foreign investors and support business growth.
GEORGIA COMPANIES
Georgia offers several business structures to accommodate different types of enterprises, each with specific registration requirements:
Sole Proprietorship
Suitable for individuals operating a business under their own name. This structure is simple and does not require separate registration.
Partnerships
Includes general partnerships where all partners share liability and income. Partners must declare their share of income for tax purposes.
Limited Liability Companies (LLCs):
Provides limited liability protection to owners and allows for flexible management. LLCs are popular among small and medium-sized enterprises.
Joint Stock Companies
Can be private or public. Private joint stock companies are often used for smaller businesses, while public joint stock companies may list shares on the stock exchange.
Branch Offices
Foreign companies can establish branch offices in Georgia to conduct business activities. These branches must comply with local regulations and have at least one authorized representative in Georgia.
Representative Offices
Foreign companies may set up representative offices in Georgia to explore market opportunities. These offices are restricted to non-commercial activities, such as market research and promoting the company’s business, and cannot engage in direct business transactions.
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