With the support of its investors, GF will provide bridge financing and technical support to a select group of Ukrainian companies and their employees
In Georgia, the Law on Entrepreneurs is applied, which regulates relations connected with entrepreneurial activity and determines the business statuses within the framework in which an entrepreneur registered in Georgia is allowed to operate.
Entrepreneurship may be carried out in the form of an individual entrepreneur or a legal entity (including a limited liability company).
An individual entrepreneur is one person who conducts entrepreneurial activity. It is the only subject of entrepreneurial activity who exercises his/her rights and fulfills obligations in business relations as a natural person. An individual entrepreneur is not a legal entity. An individual entrepreneur shall be personally liable to creditors or other persons with all of his/her assets for all obligations arising from his/her entrepreneurial activity. The responsibility of an individual entrepreneur shall not be limited only to the business activity assets. He/she shall be liable for the obligations arising within the activities with all of his/her assets, without restriction. For example, to settle bank indebtedness or accounts payable, both the activities resources (cash or non-cash assets) and an individual entrepreneur’s personal assets shall be considered.
An individual entrepreneur shall be obliged to pay a tax, specifically, income tax. Income tax shall be paid out of the profit gained from the income less documented expenses. For detailed information on taxes, see a separate section.
A limited liability company (LLC) is a legal entity, the capital of which is divided into shares and the responsibility of its partners for the company liabilities shall be limited to the legal entity’s assets, in particular, LLC shall be liable to a creditor with all of its assets. This means that a partner shall not be responsible for fulfillment of the obligations proceeding from the activities of the LLC. On the other hand, neither LLC shall be responsible for its partners’ obligations. However, it should be pointed out that according to the agreement other terms may be also provided and responsibility may arise within the framework of the agreement.
LLC’s activities shall be managed by and representative authority shall be conferred on the management body, which shall include one or several senior officers (director or directors). It should be pointed out that a director may be both a natural person and a legal entity. LLC is not required to have a supervisory board. It shall create a supervisory board if it is expressly provided for by law or if by the partners’ decision the Charter stipulates the existence thereof.
Individual Entrepreneur
For registration as an individual entrepreneur, as well as for the registration of any changes in the registered records, a natural person shall submit to the registering authority a written application for registration as an individual entrepreneur or for registration of changes. If an entrepreneur is a foreign citizen, he/she shall submit also a foreign passport. And a Georgian citizen shall submit a citizen’s identity document.
The application shall include the following data:
● The applicant’s full name;
● Legal address registered in Georgia;
● A stateless person or a foreign citizen shall submit the identity data of the identity document submitted by him/her;
● The applicant’s signature.
An individual entrepreneur’s business name shall include an addition specifying its legal form: “Individual Entrepreneur” or “IE”.
Limited Liability Company
For registration of LLC the following documents shall be submitted to the registering authority:
● Application
● Incorporation agreement signed by all founders and duly certified. Standard charters of legal entities are posted on the website of the Legislative Herald of Georgia (matsne.gov.ge) and are available for any interested persons. For registration purposes, it is not required to submit a hard copy or electronic version of a standard charter to the agency. And in the case of a non-standard charter, a charter made and certified according to the laws of Georgia must be submitted to the registering authority.
● In the incorporation agreement, alongside the data established by law, for the purpose of creating an electronic portal, the following should be specified: a person authorized for management and representation of the portal and the above-mentioned person’s phone number and e-mail;
● Identity document of an interested person;
● Consent of each person authorized for management and representation for the performance of such function (submission of the above-mentioned document is not required if the consent is expressed in the incorporation agreement);
● A duly certified consent of the location owner for determination of the legal address of the subject or a duly executed relevant agreement for occupying the location (it is required to submit the above-mentioned document only if the company legal address does not coincide with the registered address of the immovable property owned/possessed by the interested person).
● Document confirming payment of the service fee provided for by the Decree of the Government of Georgia.
In the case of an individual entrepreneur
● In one business day - approx. USD 9;
● Confirmation of the parties’ signatures on the transaction submitted for registration - the registration fee is added approx. USD 2.5
● On the day of submission of the application (on the same day) - approx. USD 25
● Confirmation of the parties’ signatures on the transaction submitted for registration – approx. USD 2.5;
● Drafting of an extract in English - approx. USD 9;
In case of a limited liability company
● In one business day – approx. USD 70
● On the day of submission of the application (on the same day) – approx. USD 130
● Confirmation of the parties’ signatures on the transaction submitted for registration - the registration fee is added approx. USD 2.5
● Drafting of an extract in English – approx. USD 9 (this fee is added to the service fee, with which drafting of an English-language extract was requested);
Registration as an entrepreneur may be carried out at any Public Service Hall or any regional office of the National Agency of Public Registry.
Website (Public Registry): https://napr.gov.ge/;
Website (Public Service Hall): https://psh.gov.ge/main/menus/2;
Google Map Link (Tbilisi): https://goo.gl/maps/YBYnXyT3LYFUrCBx8;
Google Map Link (Batumi): https://goo.gl/maps/Ax5hjUDcDSTvJ8S57;
Google Map Link (Kutaisi): https://goo.gl/maps/K1D2FRkhvMw51ZFA7;
Google Map Link (Zugdidi): https://goo.gl/maps/SumzXqfUEchsdzP46;
Google Map Link (Mestia): https://goo.gl/maps/j6RtG79ov1AA1DKZ8;
Google Map Link (Akhaltsikhe): https://goo.gl/maps/sXvM9om9jKLVttrG6;
Google Map Link (Marneuli): https://goo.gl/maps/9XLsd5FT3uij4kas6;
Google Map Link (Kvareli): https://goo.gl/maps/zVnqWpjm1Mi9vfKr8;
Google Map Link (Rustavi): https://goo.gl/maps/dFVSuYvG9kwPG6Fe8;
Google Map Link (Telavi): https://goo.gl/maps/XaxLy2mUWupCyZiq9;
Google Map Link (Gurjaani): https://goo.gl/maps/d38V2CyRVsfd9vn67;
Google Map Link (Ozurgeti): https://goo.gl/maps/eqjbEWpgGV1x9e6u9;
Google Map Link (Gori): https://goo.gl/maps/S12KwSz6ih9HCiLd7;
Google Map Link (Poti): https://goo.gl/maps/kQekdbbf315q3CkMA;
Both, citizens and non-citizens of Georgia are required to pay income tax. Non-citizens of Georgia have the income tax liability for the income received from business activities in Georgia. Income tax is assessed at the rate of 20 percent. Income tax is also charged on salaries.
In addition, an individual entrepreneur is subject to income tax, which pays income tax on profit, which is equal to documented income less documented expenses.
The submission of a property tax return for an individual is the responsibility of the person, including an individual person – entrepreneur (individual entrepreneur):
● If a person owns property on the territory of Georgia and the previous year's family income exceeds GEL 40,000. The declaration will be submitted to the tax authority no later than November 1 of the current year, and the data on the taxable property will be submitted according to the previous (last) year.
(for example, if a person buys a car in 2022, it will be reflected and the tax will be paid in the 2023 declaration, and the tax will be calculated only for the period during which the car was registered)
● If a person has taxable land on the territory of Georgia, regardless of the amount of his or her family income. The declaration will be submitted to the tax authority no later than November 1 of the current year, and the data on the land will be submitted as of April 1 of the current year.
(for example, if a person buys a plot of land before April 1, 2022, it will be reflected and the tax will be paid in the 2022 declaration, and the tax will be calculated only for the period during which the land was registered, as well as if the person bought the plot after April 1, its reflection and tax payment will be made in the 2023 declaration).
The person pays the tax after submission of the declaration, not later than the 15th of November of the current year.
Legal Entity Property Tax:
Submitting an annual property tax return to the tax authority is mandatory for both a legal entity registered in Georgia and a non-resident legal entity. The annual property tax rate is no more than 1 percent of the value of the property. The rule of calculating the value of the property is also established according to the Tax Code.
The payer of profit tax is a legal entity registered in Georgia (e.g. LLC) and also a non-resident legal entity that operates in Georgia through a permanent establishment (e.g. branch, representative office, department, bureau, office, agency etc.) and/or receives income in Georgia from existing business activity. Profit tax is not paid by an individual entrepreneur.
The profit tax rate is 15%, and subject to profit tax are:
● Distributed profit
● Expenses or other payments unrelated to economic activities, including the provision of goods/services free of charge and/or the transfer of money
● Expenses not supported by documents
● Representative cost in excess of the threshold amount
The so-called “Estonian Model” of profit tax is applied in Georgia.
VAT is paid by any person who carries out any kind of economic activity, regardless of the purpose and result of that activity. Registration as a VAT payer is also possible voluntarily, however, in some cases registration is mandatory.
The obligation to register as a VAT payer arises when the total amount of a person's taxable transactions (supply of goods/services) exceeds GEL 100,000 for 12 consecutive calendar months (approx. USD 33,000).
The tax is paid once a month and the VAT rate is 18%. The VAT payer is obliged to submit a VAT return to the tax authority no later than the 15th day of the following month and pay the tax within the same period.
The excise tax is paid by a person, who:
● Produces excise goods in Georgia (for example tobacco, and alcoholic beverages);
● Performs import or export of excise goods to/from Georgia;
● Performs supply of natural gas (in the form of gas) for vehicles;
● Provides international call termination service received from a non-resident or resident person in a mobile or fixed network;
Excise rates on excisable goods are set by the Tax Code of Georgia and are calculated individually in each case.
A legal entity is required to withhold taxes on a particular type of payment (e.g., salary or dividend) when paying a salary (including benefits) to an employee.
(The company must pay the tax in favor of the individual, for example: if the dividend is 1000 GEL, the company must declare the amount and transfer 1000x0.05 (5%) = 50 GEL to the state budget)
Individuals subject to taxation are taxed at the rate of 20% by the company, while dividends are taxed at the rate of 5%;
The taxpayer website is an electronic website of the Revenue Service that allows the taxpayer to run own business remotely. The website allows user to manage all necessary tax-related transactions.
Based on the platform, the business is able to:
● Submit tax returns and calculations
● Electronically issue invoices
● Electronically issue bills of lading
● Make electronic payments
● Receive information and messages pertaining various issues
● Carry out preliminary and unforeseen customs declaration.
To be registered, the e-page Registration Application, is to be filled out. It can be activated both in the tax authority, as well as via the link for e-activation.
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