In Georgia, every company is entitled to choose a field of activity at its own discretion and run a business without limitation, unless such an activity is directly prohibited by the “law or a permit or license” is required to perform the activity. Special permits and licenses for doing business in Georgia are required only for companies whose activities will be related to medicine, construction, communications, gambling, energy, security and etc.
According to the Georgian legislation, there are two types of applicable licenses: the license to exercise an activity and the license to use.
The License to Exercise an Activity is a license which grants a person the right to exercise a certain activity specified by the law (e.g. to set up a private security service). To obtain a license for an
activity, one has to meet particular requirements. This type of license may be used only by the person (a natural person or legal entity) who has been granted the license. Therefore, a transfer of a license for an activity to another person is not allowed.
The License to Use applies to the use of national resources specified by the law. Such a license grants its holder the right to use certain resources (e.g. natural resources). Licenses of this type can only be awarded in an open outcry tender, except the cases stipulated by the law and the holder of the license may transfer it to others.
In addition to special licenses and permits, there are various types of business activities in Georgia that are provided with special status such as Virtual Zone Person, Free Industrial Zone Enterprise, Special Trading Company, Tourist Enterprise, Small Business Entrepreneur, International Company etc. and benefit from special tax or other favorable regimes. In order to get these benefits, it is required to apply and obtain the appropriate status and certificates from the relevant agencies.
If your main business activity is to provide business activity in IT and / or software & app development service to the clients outside of Georgia, then you can apply for the Virtual Zone Entity status to the Ministry of Finance of Georgia. Virtual Zone Entities are exempt from VAT and corporate income tax and pay only 5% of personal income tax in case of dividend distribution. Read more about Virtual Zone Person’s status in our blog here.
Free Industrial Zone (FIZ) is the type of a free zone envisaged by the “Tax Code of Georgia” where the business-friendly regulations, favorable tax, and customs regulations apply. FIZ is open for production & processing of any goods or provision of services, except for: Using of buildings for residence, Production of Arms and munitions, trade of arms and munitions, Production of nuclear and radioactive substances, trade in nuclear and radioactive substances, Import, storage, production or/and sale of Narcotic and psychotropic substances, Excise goods (except for the cases for personal use).
Free Industrial Zone entities are exempt from all taxes except personal income tax (20%) which is paid a the employee. You need to apply for this status to the organizer of Free Industrial Zone and pay annual fee. There are five industrial zones operating in Georgia in the following cities: Poti (sea port), Kutaisi (third largest city) and Tbilisi (capital city): Poti Free Industrial Zone; Hualing Kutaisi Free Industrial Zone; Kutaisi Free Industrial Zone; Tbilisi Free Zone; Tbilisi Industrial Park Free Industrial Zone. Read more about Free Industrial Zone Enterprise status in our blog here.
See our blog posts about special taxation regimes in Georgia here: