An Emerging Offshore Giant
Located in the Caucasus region, at the crossroads of Europe and Asia, Georgia has been steadily emerging as a favorable offshore tax haven. Its strategic location, appealing investment environment, favorable immigration policies, and accessible residency options have rapidly attracted entrepreneurs, businesspeople, and digital nomads from across the globe.
Its political stability, burgeoning economy, and investment-friendly policies have sparked an impressive influx of international entrepreneurs and residents. Ranked 24th by the World Bank as the best places to do business, Georgia outperforms countries like Switzerland. Its popularity is boosted by its tax exemptions for offshore companies earning under 30,000 lari and reduced tax obligations for SMEs earning under 100,000 lari. Furthermore, several Free Economic Zones (FEZs) located across the country provide numerous fiscal benefits.
Georgia’s cultural influences lean more towards Europe than Asia, largely due to its progressive business policies implemented over the past two decades. Each year, it attracts almost double its population size in visitors, many of whom are entrepreneurs exploring untapped foreign investment opportunities. Over the last decade, Georgia’s economy has been growing at an annual rate of 6-12%, with even more robust growth projected for the future.
Advantages of Establishing an Offshore Company in Georgia
Georgia offers a multitude of benefits for offshore company formations:
- Territorial Taxation System: Foreign earnings remain tax-free under Georgia’s territorial taxation system.
- Open Immigration Policy: Citizens from 94 countries can enter and stay in Georgia without a visa.
- Economic and Financial Freedom: Ranked 16th globally, Georgia offers a high degree of economic and financial liberty.
- Tax Incentives: The country provides tax breaks for specific industries and small businesses. Offshore companies earning under 30,000 lari can enjoy tax-free status.
- Favorable Business Environment: Georgia welcomes foreign investment, supported by the presence of substantial foreign capital.
- Free Industrial Zones: Companies operating within Georgia’s FEZs enjoy various tax exemptions.
- No Controlled Foreign Corporation Laws: Georgia does not enforce these regulations.
- High Banking Interest Rates: Georgian banks offer up to 10% interest for normal savings accounts and up to 14% for fixed deposits in local currency.
- Ease of Company and Bank Account Setup: Non-residents can easily and cheaply establish a company and open a bank account.
- No Minimum Capital Requirements: Both for opening a bank account and for establishing a company.
Deep Dive: Georgia as an Offshore Tax Haven
Geographic and Political Landscape
Georgia is nestled between Western Asia and Eastern Europe, bordered by the Black Sea to the West, Russia to the North, and Turkey, Armenia, and Azerbaijan to the South and Southeast. The capital, Tbilisi, serves as the economic powerhouse, dominated by financial services and businesses.
Operating as a representative democratic parliamentary republic, Georgia’s executive branch is helmed by a President-appointed cabinet and Prime Minister. Since ratifying its constitution in 1995, the country has strengthened its ties with Western allies, evidenced by its memberships in various international bodies and agreements.
Economy and Infrastructure
Georgia’s economy, while not at par with more developed nations, has been showing significant progress. An impressive growth rate of 12% was achieved in 2012, with an average of 6% maintained over the last decade. The government’s commitment to economic development led to the establishment of several Free Industrial Zones (FIZs), attracting investors and foreign entrepreneurs, leading to Foreign Direct Investments (FDI) nearing 10% of the GDP.
Georgia’s infrastructure, centered around roads and railways, facilitates nationwide transport of goods, acting as the country’s transportation lifeline.
Currency and Law
Georgia does not impose exchange controls, and its currency, the lari (GEL), is a floating currency easily exchangeable into USD or EUR. The country’s legal system is founded on Civil Law, and it operates under multiple pieces of corporate legislation.
Taxation and Offshore Companies
Georgia operates under a tax system with some of the lowest rates in Europe. A flat income tax of 20% and a corporate tax rate of 5.75% are imposed. Other taxes include an 18% VAT, an import tax varying from 0-12% based on the type of goods, and a minimal 1% tax on real estate. The country also offers significant tax benefits for high net-worth individuals and has established Double Taxation agreements with 52 other countries.
In conclusion, with its competitive advantages, including tax benefits, economic freedom, and a business-friendly environment, Georgia stands as an attractive offshore jurisdiction for entrepreneurs and businesses worldwide.