The competitive nature of business the world over has made governments offer incentives or sops to attract investments. These come in the form of low tax rates (even the absence of them,) no red tape for setting up a business, drafting pro-business policies, creating favorable trade treaties, or making the visa procedures simpler among many others. Foreign direct investment has become an important enabler to improve the economic status of a country. Just look around the world and find out why China or for that matter, the tiny island nation of Singapore is treated as an economic powerhouse. The answer can be found in the number of companies choosing these countries as their investment destination.
The Free Zones:-
The Republic of Georgia has gained repute as one of the countries with a favourable business environment. In fact, Georgia has left no stone unturned to attract investments, be it by passing business-friendly laws, signing bilateral trade treaties, simplifying the tax procedure and streamlining the banking procedure to the setting up of free zones. Although the business climate in the rest of Georgia is conducive for setting up and carrying out a business, the free zones are an added attraction. These act as tax havens where many requirements like the need for licenses etc do not exist. There are three free zones in Georgia each with its distinct advantages. Listed below are the three free zones and the benefits businesses can gain by investing in any of these.
Kutaisi Free Zone:- Set up in the second largest city of Georgia, the Kutaisi free zone covers an area of approximately 27 hectares. The zone employs around 20,000 people in industries that operate in a multi-sectoral environment. The advantages of investing in this free zone are multi-pronged.
1. No taxes to be charged on the profits made by foreign companies that are set up here.
2. Exemption for companies incorporated in the zone from property tax, VAT, and dividend payment.
3. Full repatriation of capital and profit to another country.
4. Goods produced within the zone are exempted from custom’s duty.
5. Multi-currency transactions are allowed.
Tbilisi Free Zone:- Located in the capital city of Georgia, the Tbilisi free zone has 28 industrial plots covering an area of 17 hectares. The numerous advantages for businesses investing here are given below.
1. Access to a well-built infrastructure such as ready-made office spaces, warehouses, and facility management services.
2. Access to the largest pool of employees in the city.
3. Income made by a company is exempted from corporate tax.
4. No obligation on companies to administer the personal income tax of employees.
5. Exemption from property tax.
6. Exports will receive tax credits with no VAT to be charged.
Poti free zone:- Located near the largest sea port in Georgia, the free zone was established by the RAK Investment Authority of UAE. The advantages of investing in the free zone are similar to the others with additions like low labour costs, and operational advantages due to the zone’s proximity to the Black sea port.
Investing in the free zones in Georgia is an advantage with a capital A, thanks to their slew of tax exemptions and incentives. However, it would be better to engage the services of an experienced and credible investment consulting firm for business facilitation in these zones or in any other part of Georgia.