Georgia is a nation which lies between Eastern Europe and Western Asia, yet fundamentally remains a European country. The country is the heart of culture, history, and arts. Thanks to its strategic location and influence from the neighboring countries, Georgia enjoys unmatched economic and cultural perks. With the ever-presence of Caucasus Mountain villages and the sandy Black Sea beaches, UNESCO has identified several tourist locations in Georgia. With great splendor comes great opportunities, and Georgia has caught the eye of numerous business, entrepreneurs, and investors. Moving to the business environment of the country, Georgia is well received for its business-friendly environment and booming industries. Holding the 6th rank, Georgia has easily made its way to the top 10 of the Ease of Doing Business rankings maintained by the World Bank Group in 2019. Here are 5 reasons why you ought to invest in Georgia.
1. A Tactical Geographic Location
Georgia is a scenic European country lodged between Europe and Asia, two alluring forces which helped draw in more visitors and the reason why the nation welcomed about 8 Million tourists in 2018, the preceding year. Moreover, the nation is an abode to several tourism sites approved by UNESCO. Georgia shares its boundaries with Russia in the north and Turkey, Armenia, and Azerbaijan in the south. Not only has Georgia benefitted with the multi-cultural experience but also from a growing regional market and various import substitution opportunities in the food processing, household goods, construction materials, packaging, ceramic and glass products, chemicals, and plastics industries.
2. Doing Business Has Never Been Easier
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. 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 is careening at full speed across the highway of prosperity, speeding towards becoming an increasingly business-friendly country and quite literally dubbed as the 6th best country in the world in terms of economic development and ease of doing business. This consequently led to a rapid shift of investors eyeing Georgia as an appropriate platform to set their business. And why not? Georgia made starting a business an extremely easy ordeal by simplifying post-registration procedures such as tax registration, social security registration and licensing. The process simplified to take hardly 2 business days to get your business started.
3. Georgia's New Tax Regime
The third reason which makes Georgia extremely beneficial to investors is the placement of a new tax regime. Taxation in Georgia is exceptionally in favor of business entities and entrepreneurs. Georgia made paying taxes effortless and easier for businesses by a revision of tax laws, simplification of tax compliance processes and a gradual decrease in the number of tax filings or payments. Additionally, companies that reinvest their profits or keep them in the country are not mandated to pay profit tax. Taxation rates are low in Georgia, following the new amendments; the Tax Authority now sets the following taxes and rates:
- Income tax stands at 20% flat rate.
- Corporate tax sees an imposition of 15%.
- Value Added Tax (VAT) in Georgia is a minimum 18%.
- The excise tax is an exception and is imposed on a few selected goods.
- Import tax is 0%, 5% or 12%.
- The property tax will be only up to 1%.
4. Georgia's Relationship with the European Union
The European Union and Georgia have a very cohesive and productive relationship. This eventually gave rise to the EU-Georgia Association Agreement, which was enforced on the 1st July 2016 and endeavored to pave way for political harmonization and economic amalgamation of the European Union (EU) and Georgia. Later on, the EU and Georgia entered into a Deep and Comprehensive Free Trade Area (DCFTA), this regime increased market access between the EU and Georgia and was based on adopting better regulations and enabling access to a 2.3 billion market exempted from customs tax. In addition, Georgia has signed a Free Trade Agreement with China, Turkey and the countries of the Former Soviet Space; this means that Georgia is allowed free trade with more than 2 billion people, while Georgian citizens have benefited from visa-free travel to the Schengen area since 28 March 2017. The EU is Georgia's largest trading partner and provides over €100 Million to Georgia annually in the form of technical and financial assistance.
5. Ethical and Corruption-free Business Environment
Last but not least, and probably an equally crucial reason as the other four is the overall business environment. In a way, this last reason is a cocktail of the other reasons stated above. But despite being an alloy of the previous points, the resulting aspect is wholly unique. A very important factor which initially slipped the minds of investors and is now being identified is the extent of how ethical and corruption free a business environment is. Corruption is a serious issue which can be forgotten to be taken into account while setting business and later on can boomerang back to harm a business. Investors today are very proactive, and take foreign investment seriously and as an art. Fortunately, Georgia is an expert pioneer in fighting corruption with weapons in the form of severe reforms initiated in 2004 and not stopping ever since. In fact, according to Transparency International (an international ranking index that ranks 180 countries and territories by their perceived levels of public sector corruption according to experts and businesspeople. It uses a scale of 0 to 100, where 0 is highly corrupt and 100 is very clean) Georgia ranks 46th out of 180 countries and ranks 1st in the Caucasus and Central Asia.
In a Nutshell
Georgia enjoys a well-established relationship with the EU and through the Free Trade Agreements; Georgia has access to a 2.3 billion market and is exempted from customs tax. It holds the pillars of firm anti-corruption amendments. The taxation is at all-time low compared to the other countries across the globe. And the feature that makes it the best nation to do business is the ease with which one can establish a company.
If you wish to invest in Georgia, we can guide you through the whole process!
Business Setup Worldwide is a consulting firm helping entrepreneurs and firms with company incorporation, accounting, bookkeeping, audit, intellectual property protection, and corporate secretarial services in Georgia. To know more, contact us – we’d be happy to help.