Start Companies for Manufacturing «Made in Georgia» Goods

Would you like to start companies for manufacturing and selling goods in European and Asian countries? Are you looking for a regional logistics/transport hub linked to global markets? Do you dream of setting up your facilities in a free trade zone, exemptions from import/export duties, and minimal paperwork at the Customs? Would you rather move your industrial facilities to where profits can be tax-free? Is your current situation forcing you to register your plant in a safer, less costly, business-friendly destination abroad?  

Then this article is an invaluable clue for you on the destination offering most favorable terms for offshore manufacturers: Georgia, a dynamically developing country in the Caucasus. Its Free Industrial Zones provide many incentives to foreigners who start companies for manufacturing «Made in Georgia» goods.  

You will not have to spend too much effort when starting a manufacturing company in Georgia if you order our very special package of turn-key services:

• customized expert advice on how to open your industrial facilities in Georgia, become the manufacturer of the «Made in Georgia» goods, and obtain tax exemptions (for example, on exports to the European Union);
• facilitation in the fast registration of your company in Georgia;
• instruments of incorporation, i.e. the Memorandum of Association, the Articles of Association, and licenses for SMEs, large companies, or megacorporation.

A decision to open industrial facilities in Georgia can be one of your best and safest strategies. The comprehensive economic and legal reforms and the establishment of the Free Industrial Zones in Tbilisi, Kutaisi, and Poti had advanced Georgia to the Top 10 countries in the World Bank Doing Business ranking, even before the pandemic began. In 2022, the country continues to demonstrate its growing maturity and resilience. 

Why should you start companies for manufacturing «Made in Georgia» Goods in the Free Zones in Georgia 

Georgia is favorably located at the intersection of Eastern Europe and Western Asia.  This benefit helps in trade and supply of products in both directions on almost equal terms. 

You can say Georgia is becoming a new Silk Road, and its Free Industrial Zones are the Eurasian transit hubs with the fast-growing capacities and business potential.

To place your manufacturing capacities here means to access the market of 900,000,000 clients in Eurasia and reach beyond other horizons. This opportunity is available thanks to the following transport gateways:

• 2 seaports with the annual cargo turnover of 15 million tons
• 3 international airports and several national airports around the region
• the well-developed freeway and rail infrastructure, serving over 60% of transit freight. This network includes 1,500 km of international roads and 2,100 km of railroads.

For example, while shipment by sea takes 45-60 days to deliver goods from the border between China and Kazakhstan, to Chernomorsk (formerly Ilyichevsk, Ukraine), it takes only 7 days by rail.

Moreover, the Georgian government has signed comprehensive free trade agreements with 

• the European Union,
• the CIS countries,
• Turkey,
• China and the Hong Kong Special Administrative Region,
• the USA, Canada, Japan, Norway, Switzerland, Iceland, and Liechtenstein.

Georgia is revamping and coordinating its Tax Code with the Customs Code and the EU practices. While previously there were 26 taxes in the country, now there are only 6 (Corporate Profit Tax, Value Added Tax, Excise Tax, Personal Income Tax, Import Tax and Property Tax). Furthermore, in the Free Industrial Zones of Tbilisi, Poti, Kutaisi, there is only 1 tax – a Payroll Tax of 20%. Compared to what you would have to pay in the mainland Georgia, you can save a lot by deploying your assets in the Georgian FIZs. 

All the Free Zones in Georgia provide the following tax incentives:  

• exemption from the corporate income tax (which is charged at 15% of the taxable income base in the mainland Georgia)
• exemption from the property tax (1% of the average book value of the property)
• import tax exemption (up to 18% of the value of imports)
• exemption from VAT (at the rate of 18%)
• exemption from the dividend tax (5%)
• absence of the mandatory automatic exchange of information with authorities of other countries.

Confidentiality is the luxury Georgia FIZs can maintain, unlike over 100 countries and offshore havens that have given up the financial secrecy rule after they adopted the Common Reporting Standard (CRS). Georgia is one of the few jurisdictions that offers a secure business environment for offshore business registration and wealth accumulation.

Our recommendation to start companies for manufacturing «Made in Georgia» goods is particularly relevant for beneficial owners that seek to enter the EU markets. The «MADE IN GEORGIA» national Certificate of Origin allows to import its products to the EU countries without import taxes. 

It takes 3 steps to get your company registered in any Georgian FIZ of your liking:

Step 1. Book a consultation on where and how to start companies for manufacturing «Made in Georgia» Goods.

You can register your business and set up facilities in any Free Industrial Zone in Georgia. 

Each FIZ has its own peculiarities worth considering when planning the destination for your business. For example, the Poti FIZ is particularly attractive due to its unlimited land inventory, as well as its location near the seaport and the railroad. If your production cycle is sensitive to high humidity, it is better to choose the Tbilisi FZ. Its strength is the close proximity to the capital of Georgia – the biggest hub for foreign investments.  If your business needs electricity consumption on a large, industrial scale, the Tbilisi FZ is right for you. The Kutaisi Free Zone and the Hualing Kutaisi FIZ also have their advantages. 

You will be able to discuss with our experts all the pros and cons of selecting this or that destination and choose the most suitable one for you. Besides, you can check whether your products will qualify for the «Made in Georgia» certificate of origin. This preferential certificate is regulated by the Georgian legislation and the international free trade agreements. By obtaining it, you will be able to supply products to the European Union, CIS countries, China, Japan, Norway, USA, Switzerland, Canada, and other destinations without having to pay the import taxes.

The process leading to the «MADE IN GEORGIA» certification requires the verification of your manufacturing facilities’ compliance. It can take up to 2 months (depending on the number of products). Please note that we are ready to guide you through the verification procedure. To book a one-on-one online session with our consultant in Georgia, please contact us.

After you discuss all the issues and concerns with our expert, you can launch the verification procedure by forwarding to us the following information:

• a list of raw materials that you intend to import to manufacture your products
• a list of countries where you intend to ship your products to + a list of products + the customs code
• a brief outline of the manufacturing process.

Step 2. Rely on our on-site turn-key facilitation in your efforts to start companies for manufacturing «Made in Georgia» goods

Once you receive the confirmation that your upcoming manufacturing business complies with the requirements of the Georgian legislation and the international trade agreement, you can be sure you have obtained the «Made in Georgia» Certificate of Origin for your products. Then you can rely on the local hospitality and support in Georgia in hitting all your priority objectives, starting with the rent of land and recruitment of labor resources.

For example, the most attractive zone for setting up manufacturing facilities in Georgia is Poti FIZ. This Free Industrial Zone offers to tenants:

• 300 ha of land for tenancy by manufacturers  at $3-12 per sq.m.
• 2 on-site customs inspection posts
• the on-site international railway terminal
• the seaport of Poti.

The Poti Free Industrial Zone provides facility management services and can take care of the workforce recruitment. Please note that Poti has the population of about 80,000 people, so if you need highly professional employees, you should negotiate with the Tbilisi FZ. 

The Tbilisi Free Zone is particularly attractive in terms of trucking and air transportation. Its key advantages are as follows:

• low tenancy and licensing rates
• low labor costs, the minimum wage requirements
• low cost of utilities
• no quantitative restrictions or tariff barriers
• 20 minutes per a standard customs inspection procedure 
• 0% customs tax on all imports (in case of re-export)
• 0% customs tax on all exports
• 0% VAT on all imports (in case of re-export)
• 0% VAT on all exports.

Step 3. Prepare incorporation documents and obtain licenses for the construction 

At the two previous stage you have already received the confirmation of your business’s eligibility for the «Made in Georgia» certificate. You have settled all the fundamental matters on the land/premises for the future manufacturing facilities. Now you can take care of the instruments of incorporation, obtain licenses, and get all contracts agreed. 

The cost of company registration varies. The most expensive document is the manufacturing license:

• manufacturing and trade licenses for SMEs investing up to $5 million will cost $5,000.00 per year 
• manufacturing and trade licenses for large companies investing up to $25 million will cost $10,000.00 per year
• manufacturing and trade licenses for Megacorporations investing over $25 million will cost $20,000.00 per year.

At this stage, we will settle all the fundamental matters for you and select the necessary contractors to get the construction plan designed and financial estimations agreed. 

Georgia is known for the ease of doing business, which means that you will need to stay in the country for just a few days before all legal issues get settled, and the construction plan is coordinated with the state authorities.

You will see that the one-off costs of registration, the facilities construction and maintenance costs, as well as the annual licensing costs are offset by the ease of management of financial and corporate processes:

• the simple business setup procedures
• the flexible corporation options
• no minimum capital required
• 100% foreign ownership
• 100% repatriation of capital and profits
• no need to file tax returns
• low tenancy rates
• low labor costs, minimum wage requirements.

How do I register and start my company for manufacturing «Made in Georgia» Goods?

To launch your company registration, you are welcome to describe your plans and concerns in a message to our email address: info@offshore-pro.info. Our Georgian experts will contact you and design an action plan specifically for your manufacturing enterprise. Then you can proceed remotely to the first stage of the process – the verification of your documents’ compliance with the “Made in Georgia” requirements.

Nowadays, Georgia continues the development of large infrastructure projects, such as the deep-sea port of Anaklia, the Baku-Tbilisi-Kars railroad, the East-West highway. This means that its capacities and appeal for investors will grow in the near future.  Together with Georgia, foreign manufacturers based in its FIZs will quickly emerge on new global markets. If you see our proposal as a practical aid and solution, you should not delay your decision. We have already seen how the growing popularity of the second citizenship offer in Georgia has impacted the procedure. Likewise, the beneficial offers and favorable conditions in Georgia’s Free Industrial Zones can become much more costly or less accessible after scores of foreign manufacturers recognize their advantages. This won’t take long. So you better hurry up.