The Free Industrial Zones (FIZ) In Georgia

Why Free Industrial Zones In Georgia

The Free Industrial Zones In Georgia: Georgia has very flexible and comprehensive legislation that fosters a business-friendly environment and helps maintain a healthy investment climate. Free Industrial Zone (FIZ) operations are regulated by the Law of Georgia on Free Industrial Zones which aims to promote economic growth, enhance industrial competitiveness, and attract foreign direct investment.

Free Industrial Zone is designed to create such a tax, legal, and administrative environment that tenant companies can compete successfully on a global market.

Team of Company Formation Georgia in Georgia can give you detailed information about all the steps required for opening a TFZ and all the legal requirements this type of company needs to fulfill.

THE FREE INDUSTRIAL ZONES IN GEORGIA – ENJOY THE FOLLOWING BENEFITS:

• Tax Incentives;
• Simplified procedures;
• Payments may be carried out in any currency;
• Exemption from the majority of licenses/permits;
• Autonomy from the local self-government bodies.

THE FREE INDUSTRIAL ZONES IN GEORGIA HAVE FOLLOWING TAX ADVANTAGES:

• The income of a Free Industrial Zone Enterprise is exempt from the Corporate Income Tax;
• Interest and Dividend paid by a Free Industrial Zone Enterprise is not taxed and is not included in the taxable income base of the receiver;
• Trade between the Free Industrial Zone Enterprises are exempted from the VAT;
• Free Industrial Zone Enterprises have no obligation to administer the personal income tax of the employees;
• Free Industrial Zone Enterprises are not liable to asses and pay Reverse Charge VAT (RCVAT);
• Export is exempted from VAT with the entitlement to tax credit;
• The property, including land, located in a Free Industrial Zone is exempted from property tax;
• Trade between a Free Industrial Zone Enterprise and a Georgian company is taxed at 4% of the invoice value.

OPERATIONAL ADVANTAGES:

• Reliable Infrastructure;
• Low rental prices;
• Eligibility to a national certificate of origin;
• Easy company set-up;
• Turn-key solutions;
• Low tariffs on electricity;
• Proximity to the largest labor pool of Georgia;
• Low licensing costs and simplified regulatory procedures;
• Low costs of utilities and communications;
• Facility management service.

AS A RESULT, COMPANIES MAKE SIGNIFICANT TAX SAVINGS ON:

• Corporate tax – 15% of the taxable profit base;
• Property tax – 1% of the average book value of property;
• Import tax – up to 18% of import value;
• Value Added Tax (VAT) – 18%;
• Dividend tax – 5%.

TFZ operates under the Law of Georgia on Free Industrial Zones, which ensures some regulatory incentives for the registered companies. The following activities of a Free Industrial Zone Enterprise (FIZ Enterprise) do not require special licenses/permits:

• Production/processing of food products for new-born babies and toddlers;
• Production/Transmission/Distribution of electricity;
• Distribution/Transportation of natural gas;
• Transit of products subject to veterinary control;
• Operation of dangerous activities;
• Local passenger transportation services;
• International shipments of products subject to international quotas;
• Clinical research and production of pharmacological products (medical products except for narcotic products);
• First and second group pharmacy activities;
• Import of non-iodized salt.

Construction permits are issued by TFZ according to simplified procedures.

Following activities are prohibited by law on the FIZ premises:

• Manufacturing of weapons/arms and ammunition, trading arms and ammunition;
• Manufacturing of nuclear and radioactive substances, trading of nuclear and radioactive substances;
• Importing, storing, manufacturing and/or selling narcotic and psychotropic substances;
• Importing, storing, manufacturing and/or selling tobacco products and/or tobacco raw materials;
• Using a building for residential purposes;
• Importing, storing, and manufacturing and/or selling excised goods.

The relationship between the FIZ administrator and the FIZ Enterprise is regulated by the TFZ charter and the respective registration/licensing/lease agreement.

COMPANY REGISTRATION

FIZ Enterprise may be established by a local and/or foreign individual as well as a local and/foreign legal entity. FIZ Enterprise will be registered at Entrepreneurial and Non-Entrepreneurial Legal Entities Registry by the ordinary registration procedures which take ONE business day upon submission of the following documents.

ESTABLISHMENT OF FIZ ENTERPRISE BY FOREIGN LEGAL ENTITY

Documents for registration of a FIZ Enterprise by the foreign legal entity:

• Notarized copy of Articles of association of the foreign company;
• Extract about foreign legal entity issued by the relevant foreign authority;
• Notarized resolution of a foreign entity to establish a FIZ Enterprise in Georgia;
• Notarized Power of Attorney issued by a foreign entity in connection with the establishment of FIZ Enterprise in Georgia authorized consent of a person to be appointed as a director of FIZ Enterprise;
• Copy of I.D. document of a person to be registered as a director of FIZ Enterprise;
• Notarized articles of Association of FIZ Company;
• Consent about registering the legal address of FIZ Enterprise on the territory of FIZ (such consent is issued by the administrator of FIZ).

Documents issued/prepared outside Georgia shall be legalized or certified by apostille.
Documents prepared in Georgia shall be certified by Georgian notary.

ESTABLISHMENT OF FIZ ENTERPRISE BY FOREIGN CITIZEN

Documents for registration of a FIZ Enterprise by foreign citizen:

• Copy of international passport of a founder;
• Minutes of meeting about establishing FIZ Enterprise in Georgia;
• Consent of a person to be appointed as a director of FIZ Company;
• Copy of I.D. document of a founding partner(s) of FIZ Enterprise;
• Copy of I.D. document of a person to be registered as a director of FIZ Enterprise;
• Articles of Association of FIZ Company;
• Consent about registering the legal address of FIZ Enterprise on the territory of FIZ (such consent is issued by the administrator of FIZ).

Documents issued/prepared outside Georgia shall be legalized or certified by apostille. Documents prepared in Georgia shall be certified by Georgian notary.

ESTABLISHMENT OF FIZ ENTERPRISE BY GEORGIAN LEGAL ENTITY

Documents for registration of a FIZ Enterprise by a legal entity/entities registered under the laws of Georgia (Georgian incorporated legal entity/entities):

• Resolution of a parent company to establish a FIZ Enterprise;
• Consent of a person to be appointed as a director of FIZ Enterprise;
• Articles of Association of FIZ Enterprise;
• Copy of I.D. document of a person to be registered as a director of FIZ Enterprise;
• Consent about registering the legal address of FIZ Enterprise on the territory of FIZ (such consent is issued by the administrator of FIZ).

The aforementioned documents might be notarized or signed at the Entrepreneurial and Non-Entrepreneurial Legal Entities Registry without notarization. Power of Attorney granted by a parent company will be required if the aforementioned documents are filed by the authorized representative.

LICENSING & FEES

FIZ ENTERPRISES ARE ELIGIBLE TO THE FOLLOWING ACTIVITIES WHICH ARE SUBJECT TO THE LICENSING FROM THE TFZ ADMINISTRATOR:

• General Manufacturing License;
• General Trading License;
• Special Trading License (restricted to a certain type of activities);
• IT production/Service License;
• Consulting License;
• General Service License;
• Financial Service License (incl. Banking);
• Warehousing License;
• Logistics License.

COMPANIES REGISTERED IN TFZ ARE SUBJECT TO THE FOLLOWING FEES AND COMMISSIONS:

• Registration Fee;
• Licensing Fee;
• Lease/Rent Fee;
• Documentary Charges (issuing copy or replacement of the original license, amendments in the license, etc.).

For complete information about the required permits for opening FIZ, please contact the Company Formation Georgia team. If you want to open a FIZ, we can also help you submit any documents and contact the relevant authorities if the language is a barrier for business.