Government Incentives to Produce In Georgia
The state program “Produce in Georgia” is being implemented by the initiative of Government of Georgia. The program aims at developing and supporting the entrepreneurship, encouraging creation of new enterprises and increasing export potential in the country.
PHYSICAL INFRASTRUCTURE TRANSFER COMPONENT
Within the framework of this Program the LEPL National Agency of State Property is in charge of Physical Infrastructure Transfer Component i.e. free-of-charge transfer of government owned real property to an entrepreneur under certain investment obligation:
- Creation of an enterprise with the proposed profile and launching of operation no later than two years after publication of the GoG’s relevant Act;
- In order to ensure fulfilment of obligation, investments to be made in Tbilisi should amount at least six times the real property’s market price and in other territories of Georgia – at least four times the value.
The process should be scheduled as follows:
- At least 25% of the investment–within one year after the issuance of the GoG’s relevant Act;
- Remaining investment - within the second year after the issuance of the GoG’s relevant Act;
3.Maintain the production profile during two years after putting into operation and ensure production volume as proposed before the issuance of the GoG’s relevant Act, under the following conditions: - During the first year after putting into operation – at least 25% of annual production volume as proposed;
- During the second year after putting into operation – 50% of annual production volume as proposed.
ELIGIBILITY:
An individual and legal entity registered in compliance with the Law of Georgia on Entrepreneurs may be the user of this Program except for the business entity established with government or self-government share.
INDUSTRIAL COMPONENT
Within the framework of state program “Produce in Georgia” the LEPL Enterprise Georgia is in charge of implementing Industrial Component, which envisages the following:
SUPPORT MECHANISMS:
- Interest Rate Co-financing on the loan (7%) or the leasing subject (9%) for the first two years;
- Technical Assistance: Co-financing of consulting services, export market diligence, business matching, skills development, quality management, standardization, etc.
ELIGIBILITY:
- At least 80% of the loan must be directed towards the PPE capital creation (Property, Plant, and Equipment);
- Loan amount should be in the range of GEL 150,000 - 5,000,000;
- Leasing project value should be in a range of GEL 100,000- 5,000,000;
- Manufactured end product should be on the program priority sectors list approved by the Program mandate.
HOST IN GEORGIA
To facilitate the development of regional tourism in Georgia, the LEPL Enterprise Georgia offers program 'Host in Georgia', which targets and supports local hotel Industry.
SUPPORT MECHANISMS:
- 7% Interest Rate Co-financing on the loan for the first two years;
- Technical Assistance: Co-financing of consulting services, business matching, installation of technology and innovation, skills development, quality management, standardization, etc.
ELIGIBILITY:
- At least 80% of the loan must be directed towards the PPE capital creation (Property, Plant, and Equipment);
- Loan amount should be in the range of GEL 200,000 - 2,000,000;
- Ownership of the land plot designated for the hotel;
- Hotels must not be located in the administrative territories of Tbilisi and Batumi
HOST IN GEORGIA- INTERNATIONAL BRANDS
SUPPORT MECHANISMS:
- Co-financing franchising/royalty fees in case of franchise agreement with international brands (up to GEL 300 000 annually);
- Interest Rate Co-financing on the loan for the first two years;
- Technical Assistance: Co-financing of consulting services, business matching, installation of technology and innovation, skills development, quality management, standardization, etc.
ELIGIBILITY
- At least 80% of the loan must be directed towards the PPE capital creation (Property, Plant, and Equipment);
- Loan amount should be in the range of GEL 200,000 - 5,000,000;
- Ownership of the land plot designated for the hotel;
- Hotels must not be located in the administrative territories of Tbilisi and Batumi.
FREE INDUSTRIAL ZONES
Free Industrial Zone (FIZ) is the type of a free zone envisaged by Tax Code of Georgia where the business-friendly regulations, favorable tax, and customs system 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)
General Condition for Creation of FIZ
FIZ may be set up:
- On any territory exceeding 1O hectares
- Upon request of organizer - physical person or legal entity
- On the Organizer or other person/persons owned plot of land (consent of owners is also required)
By the initiative of the Government of Georgia - tender
- On the state/ local self-government owned plot of land
- Lease - no longer than 59 years with the right of ownership/building FIZ Administration
Special Tax Regime
- No Profit Tax
- No Property Tax
- No value added tax on
- Import of foreign goods
- Operations carried out in FIZ
- No tax on:
Import of foreign goods into FIZ.
Export of goods produced in FIZ to other territory of Georgia - Personal Income Tax (PIT)- PIT is paid by employees of FIZ Enterprises
- Import/export of products in/from FIZ from/to enterprise outside FIZ (other territory of Georgia):
Import - 4% of receivable income
Export - 4% of market prize of supplied goods.
Four Free Industrial Zones operate 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 (managed by LLC Fresh Georgia)
- Tbilisi Free Zone
For more information contact the Estonian Chamber of Commerce