Invest in Georgia — About GNIA – Frequently Asked Questions (FAQ)

Frequently Asked Questions (FAQ)

I. Macroeconomic Environment

II Starting a Business

III. Licenses and Permits

IV. Registering Immovable Property

V. Tax System

VI. Foreign Trade

VII. Foreign Investments

VIII. Financial Institutions

IX. Pricing and Tariffs

 

 

I. Macroeconomic Environment

 

1. What is Georgia‘s GDP per capita?

GDP per capita reached $1,760 USD in 2006.

 

2. What was the GDP growth rate for the past year?

Actual GDP grew 9.4 percent in 2006 as compared with the previous year.

 

3. What is the inflation rate?

The annual inflation rate for 2006 was 8.8 percent.

 

4. What is the ratio of state debt to GDP?

State debt was 32 percent of GDP in 2006. Foreign debt was 16.9 percent of GDP, and internal debt was 10.9 percent of GDP.

 

5. What is the ratio of tax revenues to GDP?

Tax revenues were 22.7 percent of GDP in 2006.

 

6. What percentage of GDP is the budget deficit?

In 2006, the budget deficit was 0.2% of GDP.

 

7. What is the exchange rate of the Georgian lari to the U.S. dollar and Euro?

  • The average annual USD / GEL exchange rate during 2006 was 1.78.
  • The average annual Euro / GEL exchange rate during 2006 was 2.22.

 

 

II Starting a Business

 

8. How many documents are required to register a business?

In general, the following documents are required:

  • 1. Application
  • 2. Company charter
  • 3. Signature sample of the director
  • 4. For limited liability companies and joint stock companies, document certifying the appointment of directors and members of the supervisory council
  • 5. Receipt for payment of registration fees

 

9. How many days are required to register a business?

After submission of all documents, the Tax Inspection must register the business structure within three working days. Individual entrepreneurs must be registered within one working day.

 

10. What institutions should be contacted to register a business?

  • 1. Notary
  • 2. Bank (twice: for payment of fees and for opening a bank account)
  • 3. Tax Department

 

 

III. Licenses and Permits

 

11. How many documents are required to obtain a license?

There are three general documents to be presented:

  • 1. Application
  • 2. Extract from Entrepreneurs Registry
  • 3. Receipt for payment of license fee

 

Other documents may be required depending on the type of license.

 

12. How many documents are required to obtain a permit?

There are three general documents to be presented:

  • 4. Application
  • 5. Extract from Entrepreneurs Registry
  • 6. Receipt for payment of license fee

 

Other documents may be required depending on the type of license.

 

13. Is there a “one stop shop” principle?

Yes.

 

 

IV. Registering Immovable Property

 

14. What documents are required to register immovable property?

The following documents are required to register ownership rights in immovable property:

  • 1. Application for registration
  • 2. Agreement on the transfer of rights in immovable property
  • 3. Certificate on non-encumbrance
  • 4. Receipt for payment of the registration fee
  • 5. Copy of the identity card of the property owner
  • 6. Cadastral drawing

 

15. Where is property registered?

Immovable property is registered with the National Agency of Public Registry, which is subordinated to the Ministry of Justice of Georgia.

 

16. How many days are necessary to register property?

Property registration takes 1, 3, 5, or 10 business days, depending on the turnaround period requested and paid for.

 

17. What does the registration of a title to immovable property cost?

The registration fee does not depend on the value of the property. It is a fixed amount and depends on the turnaround period requested. Fees range from GEL 150 for one-day service to GEL 7 for 10-day service.

 

18. Can international arbitration be used to resolve disputes over property in Georgia?

Yes, Georgia honors the parties’ agreement or contract to rely on international arbitration to resolve disputes over property located in Georgia.

 

 

V. Tax System

 

19. How many taxes exist?

7 types of taxes: Personal Income Tax, Corporate Income Tax, VAT, Excise, Social Tax, Property Tax, Customs Duty.

 

20. What are the tax rates?

  • Personal Income Tax is 12%.
  • Corporate Income Tax is 20%.
  • VAT is 18%.
  • Excise Taxes vary, depending on the product.
  • Social Tax is 20%.
  • Property Tax rates vary, depending on the type of property;
  • Customs Duties fall into 3 brackets: 0%, 5% and 12%. 90% of goods are in the 0% category.

 

21. What are the rules for treating capital expenditures for corporate income tax calculation purposes?

Georgia’s Tax Code provides two options for deducting capital expenditures from taxable income:

1. Deducting of capital expenditures through the depreciation mechanism

2. 100% deduction in the year in which the capital expenditure is incurred without capitalization and further depreciation

 

 

VI. Foreign Trade

 

22. What favorable trade regimes are applicable to Georgia‘s foreign trade?

  • MFN Tariffs with WTO Members
  • Preferential Tariffs with the USA, Canada, Switzerland and Japan
  • GSP + with the European Union and Turkey
  • Free Trade with CIS Countries

 

23. What goods are subject to import licenses or permits?  

  • Goods subject to veterinary / phytosanitary control
  • Materials of limited circulation
  • Arms and ammunition
  • Dual-purpose goods
  • Therapeutic agents subject to special control
  • Endangered species
  • Radioactive substances
  • Means of electronic surveillance

 

24. What goods are subject to export licenses and permits?

  • Materials of limited circulation
  • Arms and ammunition
  • Dual-purpose goods
  • Therapeutic agents subject to special control
  • Endangered species
  • Radioactive substances
  • Means of electronic surveillance

 

 

VII. Foreign Investments

 

25. Does Georgian law treat resident and non-resident investors differently?

The law on “Investment Activities and Guarantees” secures equal treatment and rights to Georgian and foreign investors, except for ownership of agricultural land. Foreign legal and physical persons are allowed to purchase land in Georgia, except for agricultural land.

 

26. Does Georgia prohibit foreigners from investing in any sectors open to domestic investors?

No, foreigners may invest in any sectors open for private investment.

 

27. Does Georgia have an established securities market?

Yes, there is a securities exchange with a well-developed institutional structure and legal framework. Trading volumes are low but rising.

 

28. What restrictions will foreign investors face in repatriating capital?

None. Georgia has no restrictions on capital repatriation. Dividends are subject to a 10% withholding tax.

 

 

VIII. Financial Institutions

 

29. What is the average interest rate?

Interest rates for loans average 15-18%; and for deposits 6-10%.

 

31. Are foreign financial institutions restricted from opening branches or affiliates in Georgia?

There are no limitations on opening branches and affiliate companies of foreign financial institutions in Georgia.  Licensing terms and conditions are the same as those for Georgian residents. 

 

 

IX. Pricing and Tariffs

 

32. What types of price controls are in effect in Georgia?

The only price controls are regulated tariffs in the following sectors:

  • Communication
  • Transport
  • Energy
  • Communal utilities /services

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