Georgia is a modern and fast growing country with rich history and traditions, beautiful nature, excellent cuisine, low taxes, low crime rate, and low cost of living. Foreign business owners and investors appreciate the pace of the economic reforms, Georgia's safety, freedom and openness.
A knowledgeable local lawyer can help you to minimize risks by ensuring compliance with tax, labor, immigration and other regulations, avoid pitfalls and take advantage of tax benefits and other government assistance programs, especially if you do not speak Georgian or plan to run your business remotely.
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Legal Guide to Georgia Company Formation and Taxes
#1. Corporate Forms
The following forms of doing business are available in Georgia:
- Limited Liability Company (LLC) is the most common corporate form due to its simplicity and flexibility. An LLC can be established and directed by a single person.
- Joint-Stock Company (JSC) is the equivalent of a corporation and is suitable for larger businesses with many shareholders. A JSC may issue common and preferred stock.
- General Partnership (GP) in which all partners manage the business and are jointly and severally liable for its liabilities.
- Limited Partnership (LP) in which the business is managed by one or several general partners who are personally liable for the partnership’s liabilities, while the limited partners are passive investors with limited liability.
- Cooperative (CO) is a form of business owned and managed by its employees.
- Branch Office (BO) is a unit established by a foreign company to conduct business in Georgia.
- Sole Proprietorship is a business form run by an individual who is personally liable for the liabilities of the business.
#2. Virtual IT Zone Company
A virtual IT zone company is a tax-exempt company that operates in the area of information technologies (IT), in particular, research, development, support, design, production and implementation of computer and information systems.
The company is registered under the regular process as an LLC or a JSC after which the application for the virtual zone status can be filed with the Financial Analytical Service. Normally, the application is processed within 10 business days free of charge. The tax-exempt status is granted on a permanent basis.
The virtual IT zone company is exempted from taxes on income from providing IT services to customers based outside of Georgia. Such services are also exempt from VAT.
#3. Free Industrial Zone (FIZ) Company
A free industrial zone (FIZ) company is another form of tax-exempt company. There are currently three FIZs in Georgia:
There are no restrictions on the corporate form of FIZ companies. These can be LLCs, JSCs, sole proprietors, branch offices, etc. Certain businesses are not allowed to be residents of FIZ, namely:
- Residential construction
- Production of or trading in weapons and ammunition
- Production of or trading in nuclear and radioactive substances
- Import, storage, production or sale of narcotic and psychotropic substances
- Trading in goods subject to excise tax
The following tax benefits are available to FIZ-registered companies:
- No income tax
- No property tax
- No VAT on import of foreign goods
- No VAT on operations carried out in FIZ
- No import tax on import of foreign goods
- Personal income tax is paid by the employees of FIZ companies
- Export of goods from FIZ to other territories of Georgia is subject to 4% tax on the market price of the goods
- Import of goods from other territories of Georgia to FIZ is subject to 4% tax on the market price of the goods
Registration with a FIZ takes place after a company is registered under the normal procedure. FIZ registration normally takes 1-3 days. FIZ membership fees depend on the nature and the size of the company's activities; FIZs offer various "packages" that can be further customized according to your needs. Remote registration with a power of attorney is also possible.
#2. Branch Office and Subsidiary
Branch office. A branch office is a territorial unit (subdivision) of a foreign company in Georgia. It is not an independent legal entity in Georgia. A branch office shall be registered in the public registry of Georgia and get a taxpayer number.
Subsidiary. A subsidiary is a separate legal entity, which is registered in Georgia, it can be in the form of an LLC or JSC. The subsidiary's status grants limited liability to its parent company which is not liability for the debts of the subsidiary.
Taxation of Worldwide Income
Only income from Georgian sources is taxed.
Worldwide income is taxed.
Repatriation of Profits (Dividends & Interest)
Transfers of funds between the branch office and the head office are non-taxable intra-company transfers.
Dividends and interest income paid to a foreign parent company are taxed at 5% or a lower rate if a DTT applies.
Double-Tax Treaties (DTT)
Branch offices are non-residents and Georgia's DTTs do not apply to them.
A subsidiary is an Georgian resident company that can benefit from Georgia's DTTs.
Tax Benefits for Residents
Special rates and exemptions are generally not applicable to branch offices.
Subsidiaries are resident companies and can take advantage of certain tax benefits (reduced rates or exemptions).
Head office is liable for all debts of the branch office.
Parent company enjoys limited liability and generally is not responsible for the subsidiary's debts.
A branch office is not a Georgian entity and is governed by the laws of the jurisdiction where the head office is located.
A subsidiary is an Georgian company and must comply with the Georgian company laws.
Branch office must use the name of the foreign company (head office).
Subsidiary's business name can be different from that of the parent company.
#3. Non-Profit Organizations
A non-profit organization in Georgia can engage in business activities to the extent that such activities are of auxiliary nature and the profits are applied to the pursuit of the goals of the organization. The organization is not allowed to distribute such profits to its founders, members, donors, managers, etc.
A non-profit can be a membership-based association the primary purpose of which is to attend to the needs of its members. It can also be organized as a charitable fund. Tax benefits are granted only to certain funds the charitable nature of which is confirmed by the tax office. In particular, such funds must demonstrate at least one year of charitable activities. Tax-exempt charitable funds do not pay taxes on their income, except for income from auxiliary business activities.
Non-profits may be managed by a single executive manager or a collective board of directors.
Religious organizations are registered as public legal entities, provided that the religious denomination has historic links to Georgia or represents a religion recognized by a member state of the Council of Europe.
#4. Business Name
The business name identifies the company. It shall consist of one or several words (made up or real) as well as an ending indicating the form of the company:
- "JSC" for a joint-stock company
- "LLC" for a limited liability company
- "RC" for a registered cooperative
It is not allowed to use graphic symbols that do not have a sound or verbal equivalent by linguistic standards. The business name shall not call any confusion as to the form or the scale of the company's activity and relations among the partners/shareholders.
It is advisable to check the availability of the name in advance in order to avoid disputes with identically named businesses.
#5. Legal Address & Phone Number
A legal address, email address, and phone number are provided to the Registry. Electronic notices sent to the phone number/email address are considered officially delivered. The applicant must submit documents confirming his rights (ownership, leasehold) over the premises used for company registration purposes. Alternatively, the owner of the premises can consent to such use in writing.
Business entities and sole proprietors must register with the government, the National Agency of Public Registry. Once the registration is done an extract is issued and it is also possible to check the status of the registration online at www.napr.gov.ge. Documents issued in foreign countries must be legalized (Apostille or consular legalization), translated and notarized.
Legal Entity Registration
Next Business Day
GEL 100 ($33)
Same Business Day
GEL 200 ($66)
Sole Proprietor Registration
Next Business Day
$GEL 20 ($7)
Same Business Day
GEL 50 ($16)
Obtaining Extracts and Certificates
Next Business Day
GEL 15 ($5)
Same Business Day
GEL 50 ($16)
#7. Tax Registration
After the official registration of a company is completed the director will normally proceed to tax registration by following the instructions sent to the company email address. It is mandatory to register the company with the Revenue Service's electronic platform to be able to file tax returns and receive official notices.
Corporate Income Tax
A company registered in Georgia is considered a tax resident and is taxable on its worldwide income.
The corporate income tax (CIT) rate in Georgia is 15%. However, a company does not have to pay any taxes on accrued profits until such profits are distributed. Distributions can take the form of dividends or certain gratuitous transfers, unnecessary or undocumented expenses, etc. Profits retained by the company are generally not taxable.
No CIT is paid by the following companies:
- Free Industrial Zone Company;
- Special Trading Company:
- International Financial Company.
Payments made to non-residents are generally subject to withholding taxes. Such taxes are imposed on dividends, interests, and royalties (5%), management and other services (10%), wages (20%). These rates can further be reduced by one of the 54 double tax treaties signed by Georgia. The list of countries that have a double tax treaty with Georgia is available here.
Value-Added Tax (VAT)
VAT registration is mandatory for taxpayers with annual sales in excess of GEL 100,000 ($32,800). Smaller taxpayers may register for VAT voluntarily. The standard VAT rate is 18%. Export of goods and services is exempted from VAT.
Personal Income Tax
Both residents and non-residents are only taxed on income received from Georgian sources. Income from foreign sources is not taxable in Georgia. The standard tax rate is 20%. Dividend and interest income is taxed at 5%. Interest income received from banks or government bonds is exempt from taxes. Income from renting out residential premises is generally taxed at 5%. Capital gains from selling residential real estate, shares or other securities are exempt from taxes if these assets have been held for more than two years. Tax rates may be reduced by applicable double tax treaties.
Sole Proprietor Tax Exemption
Sole proprietors with annual sales of less than GEL 30,000 ($10,135) are exempt from income taxes. Sole proprietors with annual sales of less than GEL 500,000 ($167,000) are taxed at 1% of their sales.
Other taxes applicable in Georgia include property taxes (0 to 1% of property value), pension fund payments (2% paid by the employer and 2% paid by the employee), excise taxes and customs taxes.
#9. Shareholders & Managers
- Shareholders. There are generally no restrictions on shareholding in Georgia. Foreign individuals and legal entities are allowed to be 100% owners of Georgian companies without having to involve local partners, directors, employees etc.
- Dividends. If dividends are formally declared and distributed to shareholders they may be subject to taxation. Individual shareholders as well as non-resident corporate shareholders pay tax on dividends at the rate of 5%, which can be reduced by a double tax treaty.
- Limited Liability. Shareholders generally enjoy limited liability, which means that they cannot lose more than the amount invested and they are not personally responsible for the debts of the company. However, shareholders may be held liable if they acted in bad faith and thus intentionally damaged others.
- Managers. In Georgia companies are normally managed by one or two (rarely multiple) directors who acts on behalf of the company by virtue of law and can issue powers of attorney to other managers. A company can also have an upper-level board of directors (supervisory board) with 3 to 21 directors. The creation of the board is mandatory if there are more than 100 shareholders. Directors can be individuals or legal entities. Directors and other managers may be held liable for damages caused to the company if they act unreasonably or in bad faith. Directors may also be held liable for administrative and criminal offenses resulting from mismanagement (including tax evasion, money laundering, currency control, immigration offenses etc). Managers may also be held liable for intentional bankruptcy of the company. Having an internal auditor (audit committee) is required only for companies issuing publicly traded securities.
#10. Bank Account
At the time of company registration the company's representative indicates in the application the name of the bank with which the company plans to open its account. It takes normally 1 to 4 business days for the bank to approve the account opening. The bank normally examines the registration certificate of the company, passport copies of the directors and the shareholders. It can request other information and documents that it deems necessary for the due diligence check. It is also possible to open a bank account remotely, with a power of attorney.
Currently there are 15 licensed banks in Georgia. The two largest banks, Bank of Georgia and TBC Bank, are listed on the London Stock Exchange. Georgian banks offer various services to individuals and corporate entities, both resident and non-resident. All modern banking services are available in Georgia, including Internet and mobile banking, debit and credit cards (VISA, MasterCard, AmEx), digital cards, gold accounts, private banking, multi-currency accounts, etc.
Bank secrecy is guaranteed by Georgian law and is strictly enforced. Disclosure of bank secrets can be mandated by a court decree.
Interest rates on bank deposits are normally in the range of 10-12% for deposits in local currency and 1-3% for deposits in USD. Interest income is not taxable.
Georgian banks also offer merchant accounts and payment gateways to process online payments. PayPal is also available in Georgia.
Nationals of Iran, Syria and other countries under international and US sanctions may have difficulty opening bank accounts in Georgia. Normally banks refuse to work with nationals of these countries (and companies owned or managed by them) or may offer limited services, such as accounts in local currency only.
#11. Licenses & Permits
Certain business activities require a special license issued in addition to the general business registration documents.
License Fee (GEL)
Weapons & Security
Manufacturing of military weapons
Trade in weapons
Private security services
Medicine & Drugs
Manufacturing of narcotic drugs or psychotropic substances or their precursors
Production of drugs
Foreign currency dealers/brokers; foreign currency trading; foreign currency trading auctions
Foreign currency exchange bureaus
Non-bank depository and credit institutions
Insurance and reinsurance companies
Energy & Water
Natural gas import/export, distribution, transportation
Electricity production, transmission, distribution
Oil processing and transportation
Education programs (preschool, elementary, general, vocational, bachelor and master)
Private or public broadcasting
Electronic communication networks and associated facilities
Use of radio-frequency spectrum
Casino, slot club, betting house
Technical inspection of vehicles
Public transportation; taxi cab services (in Tbilisi)
Use of underground space
Use of forests
Import of non-iodized salt
#12. Chambers of Commerce
Newly registered companies are not required to join any chamber of commerce or professional association but they may do so voluntarily. Certain organizations are listed below:
#13. Changes & Dissolution
Corporate amendments. Registering amendments to the articles of organization of the company is normally required if the company changes its name, address, email address or phone number, directors, shareholders, etc. Registration of the amendments normally takes two business days. Next business day registration is also possible if fast-track service fees are paid (GEL 200 instead of regular 100).
Reorganization. A legal entity can be reorganized by changing its incorporation form (e.g. LLC to JSC or vice versa), merger, acquisition, split-up, spin-off, etc. The resolution of the shareholders to reorganize the legal entity is subject to registration with the public registry. Certain formalities must be respected, in particular, the creditors must be notified and given time to submit their claims. The reorganization process shall not last more than 4 months and its completion is also subject to registration.
Liquidation. The resolution of the shareholders to dissolve (liquidate) the legal entity is subject to registration with the public registry. The registry immediately notifies the Revenue Service which then decides on the timing of the tax audit. The tax audit can take as long as 90 days. Certain formalities must be respected, in particular, the creditors must be notified and given time to submit their claims.
Corporate amendments, reorganization, or liquidation can be completed remotely with a power of attorney.
12 Reasons for a Georgian Residence Permit
1. Ultra-Fast and Easy Registration
Company registration can be done in a single day if you are physically present in Georgia and choose to use sample registration documents. If the documents are customized or in case of remote registration (with a power of attorney) the process may take slightly longer. Setting up a corporate bank account normally takes one day. Only minimum documents are required, such as the passports of the shareholders and directors.
2. Low Cost of Registration and Maintenance
There are no minimum capital requirements. The company's paid-up capital can be as low as $1. There are no government fees for registering or renewing the registration of a company. The company can be in good standing without paying recurring fees of filing reports. Inactive (dormant) companies do not pay taxes and do not file tax returns. There are no requirements to rent an office, hire local people (directors, officers, secretaries, accountants, etc.), open a bank account, etc.
3. No Restrictions on Foreign Ownership
Foreigners can own 100% of a Georgian company. No local partners or agents are required. No restrictions apply to the citizenship or residency of the shareholders. All the directors and employees of a Georgian company can be foreigners. They are not required to reside in Georgia or have a local address. A foreigner can be the only director and the 100% owner of a company.
4. Residence and Path to Citizenship
Owning or managing an operational company in Georgia can qualify you and your family members for a residence status (temporary or permanent). Under general naturalization rules, a foreigner may become eligible for Georgian citizenship after ten years of residency. Georgian passport ranks 53rd in the world (as of 2020) and allows visa-free travel to 116 countries and territories, including EU (Schengen) countries, most of CIS countries, Iran and Turkey.
5. Low Taxes
The corporate income tax (CIT) rate in Georgia is 15%. However, a company does not have to pay any taxes on accrued profits until such profits are distributed. Zero-tax status is available to FIZ companies, virtual zone IT companies. Sole proprietors with annual sales of less than GEL 30,000 ($10,135) are exempt from taxes. Sole proprietors with annual sales of less than GEL 500,000 ($167,000) are taxed at 1% of their sales. Dividends are generally taxed at 5% but this rate can be lower due to multiple double-tax treaties Georgia has signed.
6. Privacy and Reputation
It is possible to ensure the privacy of company ownership by selecting the right corporate structure or by using nominee services. Bank secrecy is strictly protected by law and it is a crime to disclose it. As of 2020, Georgia does not participate in CRS automatic exchange of information (AEOI). Georgia does not appear on any list of offshore jurisdictions, lending to its positive image and credibility. The country has an up to date anti-money laundering legislation, and the National Bank has ensured the safety, stability and good reputation of the banking system.
7. Educated and Low-Cost Labor
It is possible to find highly educated and skilled workforce in Georgia. The adult literacy rate is 99%. The is no minimum monthly salary, while the average monthly salary in the country is around $450.
8. Economic Growth and Integration
Georgia is a member of the WTO and has free-trade agreements with ex-Soviet (CIS) countries. Georgia is a modern and fast growing country with rich history and traditions, beautiful nature, excellent cuisine. It has a strategic location in the Caucasus region and is a primary spot for investors who want to access both the European and Asian markets. The country is a free and open democracy that boasts a uniquely liberal business and trade regimes, low taxes, developing infrastructure and a very low crime rate. Georgia's international rankings are available below.
9. Investment-Friendly Environment
There are many ways to make smart business investments in Georgia, for example in tourism, agriculture, manufacturing, real estate or outsourcing. The government offers many incentives and grants, has lowered or made certain taxes non-existent, thus generously lowering the costs of doing business. Georgia has a wide network of agreements on double taxation and protection of foreign investment.
Georgia and Armenia Overview
DRAM ($1 = 491 AMD)
LARI ($1 = 3.18 GEL)
GdP per capita:
Georgia and Armenia in International Rankings
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