How to Start a Business in Georgia

Are you planning to start a business in Georgia? This guide provides a step-by-step roadmap to help you navigate the various legal and administrative processes correctly. Starting a business in Georgia requires completing several key steps before registration. Let’s explore the most critical aspects to ensure a smooth launch.

Why Start a Business in Georgia?

Georgia is highly attractive to entrepreneurs due to its business-friendly approach and supportive legal environment. In 2019, it achieved unprecedented success by ranking 6th out of 190 countries in the World Bank’s Doing Business index.

Low tax rates and flexible registration policies provide significant advantages for business startups. Additionally, the country offers access to growing markets in both Europe and Asia, enhancing its appeal.

Benefits of Doing Business in Georgia

Georgia’s business-friendly environment is the foundation of its success. Entity registration is completed swiftly, and certain legal forms require no statutory capital. Free trade agreements with the European Union, Asian countries, including China, create broad opportunities for investors. The country’s stable economic dynamics further reduce risks.

Investment Opportunities in Georgia

Georgia’s legislation promotes business development by safeguarding investors’ rights. Thanks to existing tax incentives, investment opportunities are available across multiple sectors, including construction, manufacturing, technology, creative industries, and more. Additional benefits in free, international, and virtual zones create favorable conditions for business growth.

Business Sectors with High Growth Potential

Several industries in Georgia stand out for their significant potential and appeal, offering favorable conditions for investors. Below is an overview of growing industries:

• Tourism: Georgia’s tourism sector is one of the fastest-growing industries, generating $3.4 billion in revenue for the country in 2018.
• Agriculture: Georgia’s agricultural sector excels in wine and hazelnut exports, forming a key part of the economy. The government provides subsidies and programs to support agricultural development, making this sector even more attractive to investors.
• IT and Startups: Georgia’s IT sector has seen rapid growth in recent years, bolstered by special tax incentives, particularly for virtual, free, and international zone statuses.
• Logistics: Georgia’s strategic location at the crossroads of Europe and Asia gives its logistics sector a distinct advantage. Black Sea ports, railways, and road infrastructure make the country a vital transportation hub. Free industrial zones with tax benefits simplify logistics operations. These sectors consistently attract both local and international investors, offering long-term growth prospects.

Legal Requirements for Starting a Business in Georgia

Before launching a business in Georgia, it is essential to determine the entrepreneurial form that aligns with your activities and goals. The right choice of form determines your tax obligations and legal responsibilities. The most common form is a Limited Liability Company (LLC), where liability is limited to the company’s assets, protecting founders’ personal property.

The Individual Entrepreneur form is notable for its simplicity and lower costs, as tax reporting and bureaucratic procedures are minimal; however, unlike an LLC, the entrepreneur’s liability extends to their entire personal assets. For more complex or large-scale businesses, establishing a Joint-Stock Company (JSC) is an option, involving a more intricate structure. Foreign enterprises may also register a branch, depending on the specifics of their operations.

Steps to Register Your Business in Georgia

The process of establishing and forming an entrepreneurial entity in Georgia involves the following key legal steps:

• Determine the Entrepreneurial Form: Select a structure such as a Limited Liability Company (LLC), Individual Entrepreneur, Joint-Stock Company, or another entity type, based on your business objectives.
• Choose a Unique Name: Verify the availability of the chosen name in the database of the National Agency of Public Registry for entrepreneurial and non-entrepreneurial legal entities to ensure it is not already registered.
• Prepare Required Documentation: Submit the documentation required by Georgian legislation to the National Agency of Public Registry, including identification documents for founders, minutes of the meeting or partner’s decision, founding agreement, charter, and other documents necessary for entity registration.
• Submit Application and Pay Fees: Apply to the National Agency of Public Registry for entity registration. The registration timeline depends on the founder’s preference, the entity type, and the applicable fees. Specifically, the registration fee for entrepreneurial entities (except Individual Entrepreneurs) is 200 GEL for a one-working-day process and 400 GEL for same-day registration. For an Individual Entrepreneur, the standard registration fee is 26 GEL, while expedited same-day registration costs 75 GEL.

Business Name Registration and Legal Considerations

Under Georgian legislation, an entrepreneurial entity’s name must be unique and not overlap with any other entity registered with the National Agency of Public Registry. The founding agreement must specify the name in both Georgian and Latin scripts.

Format of Entity Registration Documentation

For the purposes of entity registration, all required documentation must be submitted to the National Agency of Public Registry in the format prescribed by Georgian legislation.

The authenticity of signatures on the charter, founding agreement, minutes of the meeting, or partner’s decision must be certified either at the National Agency of Public Registry or by a notary operating in Georgia.

These documents may be prepared in Georgian or any other non-state language; however, documents not in the state language must be translated and duly certified by a notary in Georgia.

Taxation and Financial Obligations for Businesses

Georgia’s tax system is designed not only to regulate tax operations but also to create favorable conditions for business development. Below is an overview of the main aspects of the tax policy applicable to entrepreneurial entities:

• Profit Tax: Entrepreneurial entities engaged in economic activities generally pay a 15% profit tax rate.
• Value Added Tax (VAT): VAT, at an 18% rate, applies to businesses with an annual turnover exceeding 100,000 GEL, requiring them to register as VAT payers. If turnover is below this threshold, registration is voluntary. Certain goods and services, such as educational materials and medical equipment, are exempt from VAT, reducing costs in these sectors.
• Income Tax: Income of individuals, including individual entrepreneurs, is generally taxed at 20%. However, with the appropriate tax status, an individual entrepreneur’s income tax may be limited to 1% or even fully exempt. Specific categories are subject to different rates; for instance, rental income, upon registration, is taxed at 5%.

Other Taxes:

• Excise Tax: Applies to specific products like tobacco, alcohol, and vehicles, with rates varying by product type.
• Import Tax: Determined by the type of goods imported into Georgia, while exports are tax-free.
• Property Tax: A local tax not exceeding 1% of the property’s value, depending on the owner’s status (individual or legal entity) and property type.

Do You Need a Business License in Georgia?

In Georgia, most businesses only require entity registration, with no additional permits or licenses needed. However, certain activities, such as healthcare or construction, mandate obtaining a specific permit or license. A permit typically relates to a specific action or object-related right, which can be transferable, while a license grants the right to conduct an activity, subject to strict conditions. To avoid legal violations, verify your sector’s requirements before starting operations.

Key Activities Requiring a Permit:

• Construction.
• Import, export, and transit of waste.
• Pharmaceutical production and pharmacy operations.

Key Activities Requiring a License:

• Medical activities.
• Electricity or natural gas production, transmission, and distribution.
• Banking and insurance activities.

Common Legal Mistakes to Avoid

When starting a business, minimizing legal and administrative risks is critical. Incorrectly selecting an entrepreneurial form increases tax obligations and may lead to financial losses. Neglecting accounting or missing tax payment deadlines results in fines and other legal complications. Additionally, incomplete or inaccurate preparation of founding documents may delay the registration process.

How Justice League Can Help You Start Your Business in Georgia

Need support? Justice League ensures the simplification of your registration and other legal matters. Our assistance provides a reliable foundation for the successful launch and growth of your business.