Georgia is a charming European country. It is enhanced with a unique culture, rich history, and all the perks derived from being strategically placed between Eastern Europe and Western Asia. Georgia is adorned with quaint Caucasus Mountain villages and the sandy Black Sea beaches. The cobblestone streets, reputable architecture make, and UNESCO tourism sites make Georgia so attractive to visitors. Moving to the business as an aspect of the country, Georgia is well received for its business-friendly environment and booming industries, especially tourism, energy, and agriculture. Georgia is featured in the top 10 of the Ease of Doing Business rankings maintained by the World Bank Group. It is a huge achievement for a country to be featured in the top 10 as is the best gateway to economic prosperity. Let's take a dive into why and how did Georgia manage to pull off this feat.
Ease of Doing Business 2018
The Ease of Doing Business Index is a ranking given to all the 190 countries of the world based on the level of simplicity and smoothness in the procedures and regulations associated with running a business in a respective nation. The score is calculated by aggregating the distance to frontier scores of different economies of the world. The distance to do the frontier score uses the ‘regulatory best practices’ for doing business as the parameter and sets a benchmark for the economies according to the respective parameter. In simpler terms, under the Ease of Doing Business Index takes all 190 countries are ranked on the based on how conducive a respective nation's business environment is. A higher ranking indicates better economic conditions and a higher level of simplicity of the procedures and regulations to start and run a business.
Georgia's Position in 2018
“I am very pleased with Georgia’s performance in the Doing Business index. The country has continued to advance its position in the rankings over the past three years. This is a testimony of the Government’s commitment to a progressive reform agenda to improve the business environment,” said Mercy Tembon, the World Bank Regional Director for the South Caucasus.
By 2019, the results were out, the list was announced, and Georgia hopped on over from 9th position to 6th position on the Ease of Doing Business Index 2018. Georgia was on a highway of development, speeding towards becoming an increasingly business-friendly country. Being, quite literally, dubbed as the 6th best country in the world in terms of economic development and ease of doing business, there was a sudden shift of investors eyeing Georgia as an appropriate platform to set their business.
Georgia's rank improved to 6 in 2018 from 9 in 2017. Ease of Doing Business in Georgia averaged 14.09 from 2008 until 2018. The Doing Business Report 2019 states that Georgia's score improved by 1.24 points and reached 83.28 points. The preceding year 2017, Georgia’s score was 82.04 points. The Doing Business Report by the World Bank calculated factors which affected 11 areas of the life of a business. Out of them, 10 are included in this year's ranking on the ease of doing business. The 10 parameters and Georgia's score are as follows:
- Starting a business- 2
- Dealing with construction permits- 27
- Getting electricity- 39
- Registering property- 4
- Enforcing contracts- 8
- Getting credit- 12
- Protecting minority investors- 2
- Trading across borders- 43
- Paying taxes- 16
- Resolving insolvency- 60
2019 identified that the most practical feat and radical change was the ease in setting up a business in Georgia. The process is so very simple and quick that it takes hardly 2 business days to get your business started.
How Did Georgia Pull it off?
Georgia's entry into the top 10 list of Ease of Doing Business is evidence of successfully implemented reforms by the Georgian Government. These reforms aimed at improving the nation's business environment, and thus Georgia was able to climb up from the 9th to the 6th position on an international rating scale. One of the premier contributors to the progression of Georgia's ranking was the Profit tax Reform, which appreciably reduced the tax burden for businesses by 40%, and trimmed down the time needed for taxpayers to declare taxes by nearly 20%.
The Action Plan
The most notable execute reforms by the Government of Georgia which were victorious are:
- Trouble-free to start a business: Georgia made starting a business an extremely easy ordeal by simplifying post-registration procedures such as tax registration, social security registration, and licensing.
- A new tax regime: Georgia made paying taxes effortless and in favor of the businesses by introducing revised tax laws, simplifying tax compliance processes and decreasing the number of tax filings or payments.
- Leveraging Automation: Enforcing contracts was enabled by expanding court automation by launching electronic payment options, automatic assignment of cases to judges and by publishing judgments.
What's Next for Georgia?
2019 holds glad tidings for Georgia. Enhancing and simplifying every step taken by entrepreneurs, improving its existing process of business incorporation, allowing new businesses to set up shop through a single procedure. Georgia's businesses incorporation procedure remains unmatched and that is the reason why Georgia earned a spot in the top 10 list. However, the future is optimistic for Georgia, and by maintaining this momentum of development, Georgia can very likely scale up to the Top 3 List of Ease of Doing Business.
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