Tax system

Georgian tax model – benefits for local and international businesses

According to the Doing Business Report commissioned by the World Bank,Georgia ranks 9th in the world in 2018 by ease of doing business. Moreover, Georgia is a country with the fourth smallest tax burden in the world, according to the Tax Misery Index Ranking by the Forbes Magazine, which is perfect rating for developing country.

The Government of Georgia is dedicated to a fair and transparent tax environment, protection of business interests and reliable tax administration system which is collected on both state and local levels here.

The country has only six taxes of which five (personal income tax, corporate income tax, Value added tax, excise tax and import tax) are on the national level and one – property tax is a local tax. Personal income tax, dividend and royalty is 5% and the most important, the country doesn’t have payroll, social security, capital gains, wealth or inheritance tax.

According to the Economic Liberty Act, Government is not allowed to increase national tax rates (except excise tax) or number of taxes without national referendum.

As for the individuals who are just starting economic activities in Georgia, they are required to register with the GTA prior to their start-up and obtain a Tax ID. Georgian citizen non-entrepreneur individuals may use a Personal ID and foreign citizen non-entrepreneur individuals have to register with the GTA prior to filing their annual personal income tax returns and obtain a Tax ID.

According to Tax Code of Georgia, if a company produces goods intended for export market, it can apply for a license about “Internal Processing Regime” to the Ministry of Finance. This license will grant the company a right to import raw materials without paying import/customs tax and VAT on these materials.

Furthermore, the Tax Code of Georgia gives an opportunity to the companies to use accelerated depreciation on capital assets (including full deduction during first year) and loss carry forward for corporate profit tax purposes (10 years).

Nowadays, Georgia has Double Taxation Avoidance Treaties with 52 countries and there’s no restrictions on currency convertibility or repatriation of capital and profit.

According to Global Corruption Barometer of Transparency International, 0% of interviewed reported paying bribe to the tax administration and World Economic Forum’s Global Competitiveness Report named Georgia among low tax rate countries, this information with all the above-mentioned data emphasize the simplicity and reliability of Georgian tax system for any interested person.

Author: Tamar Devdariani © BUSINESS GEORGIA


Construction sector of Georgia is growing rapidly

Construction & Building is the global business of creating physical infrastructure such as residential buildings, highways, bridges, factories, airports and power plants. Normally the job is managed by the construction manager, supervised by the project manager, design engineer or project architect.

While these people work in offices, every construction project requires a large number of laborers, carpenters, and other skilled tradesmen to complete the physical task of construction.

In Georgia, in the first quarter of 2017 there were 58416 employees in construction business, followed by second and third quarter 67351 and 71394. From the 2011 to 2017 years there isn’t much difference in employment in construction business. Tbilisi is the leader city in a construction employment than other cities. In 2016, 59.6% of employed people were in Tbilisi. There were 814 employed persons, representing 1.1% of all employed people in Georgia.

But there is too much difference in compensation figures of employees. From 2008 index of reimbursement has permanently went up. For example, in 2008, 2009 and 2010 the average reimbursement was GEL 634, but in the first and second quarter of 2017 it was GEL 1,951 – 2,011.

According to the National Statistics office of Georgia Business construction turnover past few years isn’t stabilized. It has raised rapidly. In 2013, 2014 and 2015 turnover was 3,244, 3,807, and 5,287 million GEL.


Overall, investment rates have fluctuated during the time depicted on the graph. It raised in 2014 and in contrast, lowest rates of investment were in 2009 and 2011.

Its important to mention that in 2017, 10 495 construction permits have been issued throughout Georgia.

As for the completed constructions in 2017, 2,2 million square meters of space has been completed. The number of completed constructions increased by 1.3% in 2017.

In the first three quarters of 2017, construction sector investment was USD 241 million. And in 2017 the figure was 86% more than in 2016.

Construction of Anaklia Deep Sea Port Has Been Launched

The Port of Anaklia is located on the shortest route from China to Europe, a route that has become a major focal point of Chinese investments in infrastructure. Cargos will travel fast between Chinese and European Markets by Port of Anaklia.

586 million USD will be invested in the first phase of construction and The total volume of investments is USD 2.5 billion. The Consortium was founded by TBC Holding and the famous American development company Conti International LLC, which implemented projects in infrastructure and capital construction.

The first step of construction will be finished in 2020 December. And they are planning to receive first cargo in 2 years from starting construction. At the end of the construction they are aiming to handle 100 million tons of cargo per year.

In 24th December, Prime Minister of Georgia, Giorgi Kvirikashvili with other members of cabinet went to Anaklia to join works.

“This is the place where Europe meets Asia, Georgia is being represented as a country of international cooperation, stability and peace. I want to once again congratulate you, the entirety of Georgia and all our friends, because this place today lays the foundation of a new Georgia”, Prime Minister of Georgia, Giorgi Kvirikashvili said.

In addition to the Anaklia Port, JSC Anaklia City (principle shareholders are TBC Holding and Conti International) is developing a Special Economic Zone on about 2,000 hectares. The new Special Economic Zone will complement the Port’s activity and transform the Anaklia project into development of a brand new city-scale economic driver for Georgia, regional business and trade hub on a crossroad of Europe and Asia.

Deep Sea Port Technical/Engineering Information

52-Year Concession

Growth to 100MM Ton

Phase 1: 7MM Ton Capacity Port – Construction complete within 3 years of groundbreaking

Creation of a port capable of accommodating Post-Panamax Size Ships


ADC has completed a concept design for Anaklia Port and Free Industrial Zone. The design will bypass competing ports in the region with superior connections to existing rail and road infrastructure, state-of-the-art equipment and communications infrastructure, berthing for 10,000 TEU vessels, flexibility for multiple cargo and vessel types, and eco-friendly practices. Capital expenditures for each phase of the Port have been estimated according to the Conceptual Design.


Major port design aspects are the following:

Optimized land footprint (less than 40% of total 1,000 hectares).

Flexibility for multiple cargo and vessel types (Panamax, Handymax, Aframax).

Maximized facility throughput (intermodal, modern STS cranes, automation).

Minimized waterfront (dry bulk and liquid piers on breakwater).

Eco-friendly sustainable practices.

Read more information about the port:


EU & the Georgian Government review 4 years of EU support to agriculture

An estimated 250,000 rural Georgians benefited from current support, EU announces third phase of assistance worth 230 million GEL

13, December 2017, Tbilisi – At the conference “Improving Rural Lives” held in Tbilisi, Prime Minister Giorgi Kvirikashvili, Ambassador of the European Union Janos Herman, and Minister of Agriculture Levan Davitashvili summarized the results of the first phase of the EU’s European Neighborhood Programme for Agriculture and Rural Development (ENPARD) in Georgia which ran from 2014 to 2017. An estimated 250,000 Georgians in rural areas directly benefited from the programme.

The EU also used the event to announce a further 230 million GEL (77.5 million EUR) for a third phase of ENPARD to run from 2018-2021.

At the event, the official keynote speeches were followed by a session with the participation of EU beneficiaries. The representatives of EU funded agricultural and rural development projects shared their experiences and success stories, as well as discussed the challenges and future perspectives. In addition, presentation of external evaluation report on different components of ENPARD Phase I was delivered by ENPARD external evaluation team.

In the framework of the event, ENPARD cooperatives gallery and the photo-exhibition of the EU-funded rural development initiatives were organized, so the guests could observe the programme’s results.

The event was attended over 150 representatives of the Government, EU partners and ENPARD implementing international and local organizations, diplomatic corps and the media.

BUSINESS GEORGIA was a media partner of the event.


The EU supports agriculture and rural development in Georgia through its ENPARD Programme. Implemented since 2013 with a total budget of EU 179.5 million (over GEL 500 million), the main goal of ENPARD is to reduce rural poverty in Georgia. The first phase of ENPARD in Georgia focused on developing the potential of agriculture. The second phase of ENPARD is centered on creating economic opportunities for rural population that go beyond agricultural activities. The third phases will continue strengthening the agriculture sector, and also focus food safety and quality standards and further development of the rural development model.

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On November 15, after three years of technical talks, during the 7th Regional Economic Cooperation Conference on Afghanistan (RECCA-VII) in Ashgabat, Turkmenistan was signed the agreement, making Georgia part of Lapis Lazuli Corridor.

Georgian Vice Prime Minister and Foreign Minister Mikheil Janelidze signed a document which will enable Georgia to be part of a one more transport corridor between Europe and Asia.

The Lapis-Lazuli Transit, Trade & Transport Route (also known as the “Lapis Lazuli Corridor”) aims to enhance regional economic cooperation and connectivity between the countries of Afghanistan, Turkmenistan, Azerbaijan, Georgia and Turkey.

The corridor begins from Aqina in northern Faryab province and Torghundi in western Herat (both in Afghanistan), and continues to the port (on the Caspian Sea) of Turkmenbashi in Afghanistan; after passing the Caspian Sea, the route continues on to Baku, capital of Azerbaijan, and then connects onward to Tblisi, capital of Georgia, as well as the Georgian ports of Poti and Batumi; in the end, the corridor will connect to the cities of Kars and Istanbul (Turkey) at the entrance of Europe.

The name “Lapis Lazuli” is derived from the historic route that Afghanistan’s lapis lazuli and other semiprecious stones were exported along, over 2,000 years ago, to the Caucasus, Russia, the Balkans, Europe, and North Africa.

Current projects will improve infrastructure and procedures across the five countries and they are estimated to exceed $2 billion, according to RECCA VII.


Georgia – diverse opportunities for each tourist

According to the latest report of the Georgian National Tourism Administration, in January – October, 2017 the number of international arrivals in Georgia reached 6,430,824, showing an increase of 18.8% compared to the same period of previous year. The majority of foreign travelers were from Azerbaijan, Armenia, Russia, Turkey and Iran.

The arrivals were also increased among the citizens of the countries from the European Union, such as Britain, Austria, the Netherlands, France and Germany. Exceptional growth in arrivals was recorded of citizens from the following countries: Saudi Arabia +171.5%, Kuwait +150.3%, Iran +122.8%, Republic of Korea +88.1%, Uzbekistan +75.4%, India +70% and China +56.9%.

The expenditures of foreign visitors to Georgia have a significant effect on the balance of payments, and approximately 64.3% of Georgia’s service export revenue comes from the tourism industry.

Georgia is offering to the tourists famous Hotel chains: Courtyard by Marriott, Biltmore Tbilisi, Hotels & Preference Hualing Tbilisi, Mercure, Millennium Hotel, Hilton Hotels & Resorts, Holiday Inn, Sheraton Hotels and Resorts, Radisson Hotels.

Georgia is attractive for tourists in many directions, especially for Wine Tourism and Ecotourism. Georgia is one of the oldest wine regions in the world and winemaking is deeply integrated in the culture of the country. The oldest archaeological remains related to grape seeds and winemaking dating back 8,000 years have been found in Georgia, while today the country cultivates over 500 varieties of grape.

Ecotourism in Georgia offers adventurous routs and every season is special for its unique opportunities to discover country. 41% of Georgia’s territory is covered by forests, with 25% of Georgia’s territory lying within protected national parks. Protected areas of Georgia offer various services including: bird-watching, boating tours, hiking, Eco-educational tours, biking, horse riding, safari tours and sport fishing.

Batumi and Tbilisi are a key gambling spots in the region, as many of the surrounding countries face serious bans on this industry. The focus on gambling, results in a higher number of visitors and this industry plays a major role in the country’s touristic strategy.

Business tourism has drastically increased last years, as many investors and businessmen are interested to launch their activities in Georgia thanks to the flexible tax system that country is offering.

It has to be mentioned that Georgia is one of the safest destinations for tourists. In 2017 the International Crime Index ranked Georgia as the 7th safest country out of the 125 countries.




Georgia begins large projects aimed to rehabilitate the roads

Georgia is continuing to upgrade and modernize its main transport arteries in a bid to ensure roads meet international standards. Several projects will be implemented by the support of the Georgian government and international organizations.

A tender-winning Korean company will create the project in six months for the rehabilitation of these roads:

  • Achkhoti-Sno-Aklatsikhe-Juta
  • Tsitsamuri-Saguramo-Tskhvaritchamia
  • Sadakhlo-Akhkerpi near Georgia-Armenia border
  • Arkhiloskalo-Samtatskaro near Georgia-Azerbaijan border
  • Tsalenjikha-Jvari-Jikhashkari
  • Gupta-Oni
  • Tbilisi-Manglisi

Additionally, a 42 km long, four-lane new section of road will be built on the Rikoti Pass – a mountain pass which divides Georgia into its western and eastern parts.

This will be the Khevi-Ubisa-Shorapani-Argveti section of the road that will include about 90 bridges and 40 tunnels.

The Asian Development Bank will help Georgia upgrade the country’s main transport route. ADB will allocate $80 million to help improve the conditions of secondary roads in Georgia.

An agreement aims at rehabilitating around 50km of road connecting Dzirula-Kharagauli-Moliti-Phona-Chumateleti, as well as railway stations and roads leading to Borjomi-Kharagauli Park.

Also the construction of a new tunnel at the crossing of the Dariali and Devdorak gorges has begun in northern Georgia.

Within the project the two km-long tunnel will be constructed the width of which will be 8.5m.

More than 47 million GEL (about $19.62m/€16.86m) will be allocated from the state budget to finance the construction of the new tunnel, announced the Roads Department of the Ministry of Regional Development and Infrastructure of Georgia.

New roads will advance tourism, trade and transportation opportunities for Georgia, simplifying for local and international businesses to operate faster. In each region, unemployed population will have new working places and modernized infrastructure.


Photo:  © Tamuna Ubiria


Baku-Tbilisi-Kars railway line is opening up reconnecting Asia to Europe

On October 30, 2017, the ceremony on departure of the Baku-Tbilisi-Kars (BTK) railway line’s first train from New Baku International Sea Port will be attended by Georgian Prime Minister Giorgi Kvirikashvili, Azerbaijani President Ilham Aliyev, Turkish President Recep Tayyip Erdogan, President of Kazakhstan Nursultan Nazarbayev and Uzbekistan Prime Minister Abdullah Arypov.

The project of a railroad between Azerbaijan and Turkey through Georgia was first discussed in July 1993 and a multi-lateral accord to build the link was signed by the three countries in January 2005. In February 2007 in Tbilisi, Azerbaijan, Georgia and Turkey signed a trilateral agreement to launch the construction of the railroad the same year.

On November 21, 2007, the presidents of Georgia – Mikheil Saakashvili, the president of Azerbaijan – Ilham Aliyev, and Turkey – Abdullah Gül inaugurated the construction of the railroad at a groundbreaking ceremony at the Marabda junction south of Tbilisi, and the first rails in Turkey began to be laid in July 2008 from Kars.

For the construction of the railroad on Georgian territory, Azerbaijan provided a US$775 million loan to Georgia, signed between a Georgian state-owned company Marabda-Karsi Railroad LLC and Azerbaijan.

In total 105 kilometers of new line has been built between Kars and Akhalkalaki, with 76 kilometers within Turkey and 29 kilometers in Georgia. The existing railway line from Akhalkalaki to Marabda and on to Tbilisi and Baku has been modernized.

Its total length is 826 kilometers and it will be able to transport 1 million passengers and 6.5 million tons of freight at the first stage. According to estimates, the railway line will be capable of carrying 17 million tons of cargo and about three million passengers by 2030.

Transportation between China and Europe will take about 15 days with the completion of the Middle Corridor. The BTK railway project will be one of the main connectors in terms of transportation projects which also include the EU-led Transport Europe-Caucasus-Asia Corridor (TRACECA) and the One Belt One Road Middle Corridor.

Implementation of an international railway project in the scope of the “Iron Silk Road” through the Baku-Tbilisi-Kars railway line and the construction of a railway line tunnel in Bosporus, along with connecting Trans-Europe and Trans-Asia railway networks and carrying freight and passengers directly through Azerbaijan, Georgia and Turkey territories from Europe to Asia, will boost the transit potential of the countries and accelerate the processes of integration in Europe, developing the cooperation within the framework of European Neighborhood policy.

The Georgian Railway company believes that increasing trade between Turkey and Central Asia provides it with a significant opportunity to capture trade flows, particularly raw materials imported into Turkey from Central Asia and finished goods exported by Turkey. With respect to Turkey-Russian trade, company believes there is an opportunity to capture more volumes, particularly of dry cargo, that are now shipped via Iran or the Russia-Black Sea route.

The project, which will bring vitality to the region both in terms of employment and trade, is the third largest project realized by all three countries after the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum projects in the energy sector.

Photo by JSC Georgian Railway


Direct flights from Oman & Romania to Georgia to be launched in 2018

Two new airlines, Oman’s Salam Air and Romanian Blue Air Airline will launch direct flights to Georgia in 2018.

Romanian company Blue Air Airline plans charter flights to Georgia from February 2018. The flight will connect Bucharest to Tbilisi.

The agreement was made during the visit of Romanian companies to Georgia organised by the Embassy of Romania to Georgia. The main goal of the visit was to deepen tourism cooperation between two countries.

The travel agency Level Tour wants to propose Georgia to the Romanian tourists as an alternative to the ski holidays in Bulgaria, Austria or other known destinations for winter sports.

The direct flight has a duration of two and a half hours and will be operated in the charter system.

One more low-cost airline from Oman, Salam Air, is entering the Georgian market, scheduling the first flights to Georgia’s capital Tbilisi, for June 2018.

The flights on the route Muscat-Tbilisi-Muscat will link the two capital cities four times a week. Furthermore, the airline company also intends to open a representative office in Tbilisi and invest in Georgia.

Last years, Georgia became a hot tourism destination from all over the world, which brought new direct flights and it has been opened new airports as well in the regions of Georgia.


Five Reasons to Invest in Georgian Agriculture

Agriculture has both big economic and social functions in Georgia. The sector employs more than half of the country’s work force and for many families, income from agriculture is the only source of their livelihood. At present, interest in the private sector, as well as in the volume of investment is not very high. However, there are many examples of successful projects owing to local and foreign investment.


Here are the main reasons for a favorable investment environment in the agricultural sector of Georgia.


Natural Conditions

Georgian agriculture has favorable natural conditions and resources for agricultural production. We have 22 different climates in the country, including both cold and dry as well as warm and humid. Almost half of the country’s total area can be used as ​​agricultural land. Further, there are naturally favorable conditions for grain, vegetable, fruit and sub-tropical crops.


Almost the whole territory of the country can be considered as fertile land where a variety of agricultural crops are able to be harvested. At the same time, the country is rich in water resources and irrigation systems exist in almost every region.


Investment Direction:  Nowadays, cultivars such as nuts or so-called “dwarf nuts,” blueberry, blackberry and pistachio are popular. They are well adapted to the local environment, characterized by their high productivity, selling price and a core market that perfectly satisfies producer interest.


Low Production Costs

Hiring workers in the agricultural sector is quite inexpensive. More than 60 percent of workers are employed in agriculture. Between the country’s industrial sectors, agriculture is the lowest paid overall. In the first half of 2016, the index was GEL 1 per month. This number is much lower as compared to the salaries in most EU countries. Additionally, the local labor force, as a rule, is quite experienced and well aware of the agricultural production process. Most Georgian farmers have been involved in agricultural activities since their childhood and they possess a significant amount of knowledge.


Energy resources required and used in the agricultural production process in Georgia are considered to be low volume. Irrigation water per hectare in eastern Georgia costs GEL 75 and GEL 45 in western Georgia. To compare these prices with those in Europe, it is higher in many European countries:  Greece, EUR 73 to 210, Italy EUR 30 to 150, Spain EUR 62 and Portugal EUR 120.


It should also be noted that the purchase or lease of agricultural land in Georgia is also inexpensive and without any limitations.


Investment Direction:  wheat, berries, corn and potatoes.


DCFTA with the EU

After the Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU, Georgia can produce agricultural products to meet the required safety and security standards which would then able them to enter the EU market with a zero custom tariff. Additionally, Georgia has an agreement with China, Turkey and the former Soviet countries about tariff reduction. These contracts simplify product export and expand the market for goods produced in Georgia which, of course, is attractive for investors.


In the process of trade with the EU, sector modernization and increasing its efficiency is needed in order for Georgia to meet required standards as well as further enable the entry of foreign companies into the country.


Investment Direction:  Bioproduction. Every day, the demand for bio products is increasing both in the EU and on the world market. A wide range of bio products can be produced by Georgian farmers. Relevant legal data about bio production also exists in the country. In 2006, the Parliament adopted the Law  on Biological Agricultural Industry which serves to regulate issues concerning the biological agricultural industry.


In Georgia, bio products such as wine, fruit juices, honey, various kinds of fruits (for example, persimmon, which is quite popular in European countries), vegetables, dairy products and others can be produced.


State Supports Agriculture

Financing for the agricultural sector has increased sharply since 2012 and the development of this sphere is one of the top priorities for the country. The state implements various large-scale projects to support agriculture and increase agricultural production.


In the 2017 state budget, agriculture will be financed by GEL 238 million. Of particular note:  low interest agro credit (GEL 42 million), viticulture development (GEL 32.4 million), food safety and plant protection (GEL 22.7 million), modernization of ameliorative systems (GEL 49 million), support for agricultural cooperative development (GEL 5.3 million), implementing agricultural research activities (GEL 6.6 million) and agricultural insurance (GEL 5 million).


Of particular note is that Georgia’s agro credit program has financed more than 700 existing and 150 new enterprises at low interest rates since 2013.


Additionally, the state is actively engaged in the following directions:  farmer awareness raising and effective agricultural extension services, data collection for market information, information gathering, processing and effective delivering of this information for workers employed in agriculture sector, compiling a farmer register, etc.


Investment Direction:  The state actively supports the development of cooperatives and provides certain benefits and preferences for them, especially for multi-functional cooperatives. The cooperatives need to have sufficient financial as well as human resources in order to develop several directions of agricultural production as well as relevant services for farmers.



In 2016, the number of visitors to Georgia exceeded 3 million while revenue from international tourism amounted to USD 2.16 billion. There are extensive opportunities for tourism development in the country with foreign visitors coming to Georgia year round. They can take part in agro tours and be involved in local agricultural activities or participate in the vintage process, harvest time, learning to make traditional Georgian products and spend time in a unique rural environment which is both new and interesting for them.


When discussing the issue of agro tourism, a look at the list of existing opportunities shows 102 resorts, 182 lands for resorts 2,400 mineral springs, 12,000 historical and architectural monuments (three are included in UNESCO’s Intangible Cultural Heritage of Humanity list), 11 national parks, 41 natural monuments and two protected landscapes.


The Georgian National Tourism Administration offers free training for those who want to start up a business in the agro tourism sphere.


Investment Direction:  Village hotels, farms, wine tours, historical monument tours.