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Free Trade Zone Law

What taxes are waived in a Georgian FIZ?

FIZ companies are exempt from Corporate Profit Tax (15%), VAT (18%) on international transactions, and Property Tax. They are still liable for personal income tax on employees' salaries.

Can a foreigner own 100% of a FIZ company?

Yes, foreign citizens or foreign entities can own 100% of a company registered in a Georgian Free Industrial Zone. There are no restrictions on foreign ownership.

Do I need to be physically present in Georgia to register?

No, registration can be completed remotely through a Power of Attorney (PoA) granted to a local lawyer or representative, who will handle the entire process.

Can FIZ companies trade with mainland Georgia?

Yes, but such transactions are treated as imports into Georgia and are subject to VAT and import duties (usually 4% of revenue is taxed if selling to mainland Georgia).

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Free Trade Zone Law: Tax Incentives and Business Registration in FIZ

Free Trade Zone Law (known in Georgia as "Free Industrial Zone" or FIZ law) is a specialized branch of business law governing the establishment and operation of companies in territories with special tax and legal regimes. Georgia is attractive to international investors precisely because of these zones (e.g., Tbilisi, Poti, Kutaisi Hualing, and Kutaisi Free Industrial Zones), where unprecedented tax incentives apply. However, benefiting from these incentives requires strict legal compliance, navigating specific licensing procedures, and establishing the correct contractual relationship with the zone administrator. Assistance from a lawyer is essential to ensure the company correctly defines its activity profile, avoids prohibited activities, and fully utilizes tax privileges.

What Does This Service Cover?

Legal services for Free Trade Zones cover all stages — from company registration to legal support for daily operations. Specialists registered on Legal.ge offer:

  • Legal Audit and Zone Selection: Analyzing the client's business model and selecting the most suitable Free Industrial Zone (Tbilisi, Poti, Kutaisi) based on tariffs and conditions.
  • Company Registration and Licensing: Establishing the company in the Public Registry and obtaining a special trading or manufacturing license from the zone administration.
  • Tax Consultation: Practical implementation and risk assessment of tax incentives designated for FIZ enterprises (0% Corporate Profit Tax, 0% VAT, 0% Property Tax).
  • Contract Preparation: Drafting lease and service agreements with the zone administrator, as well as employment contracts with staff.
  • Customs Procedure Management: Legal support for import-export operations, as goods entering and leaving the FIZ undergo a special customs regime.
  • Representation with Administrative Bodies: Handling relations with the Revenue Service and zone administration during disputes or audits.

Common Situations When You Need a Lawyer

Operating a business in a FIZ involves many legal nuances. Situations where qualified lawyer involvement is critical include:

  • Establishing an International Trading Company: You want to create a company that buys goods abroad and sells them to a third country without bringing them into Georgian territory, for tax efficiency purposes.
  • Relocating Manufacturing to Georgia: You plan to build a factory so that products receive a "Made in Georgia" certificate and benefit from free trade with the EU, but you need to meet exact criteria.
  • Risk of Prohibited Activities: You want to ensure that your activity (e.g., arms trading or providing certain services) is not prohibited by law within the FIZ territory.
  • Opening a Bank Account: Opening accounts in Georgian banks for FIZ companies is complicated due to regulations, and you need legal assistance to pass "Compliance" procedures.
  • Tax Disputes: The Revenue Service challenges the company regarding the improper use of FIZ status or tax assessments.

Georgian Legal Framework

The regulation of Free Trade Zones in Georgia is based on the Law of Georgia on Free Industrial Zones. This law defines the rules for creating, functioning, and liquidating a zone, as well as the rights and obligations of zone enterprises. The Tax Code of Georgia is crucial, as it establishes tax incentives (such as exemption from profit tax). Also relevant is the Customs Code of Georgia, which regulates the special regime for the entry and exit of goods in the zone. Government decrees specifying the rules for FIZ arrangement and operation, including the list of prohibited activities, must also be considered.

Process: How Collaboration with a Specialist Works

Working with a specialist on Legal.ge typically consists of the following stages:

  1. Initial Consultation: Reviewing your business model and determining whether it meets FIZ criteria.
  2. Zone Selection: Comparing conditions of different zones (Tbilisi, Poti, Kutaisi) and selecting the optimal option.
  3. Documentation Preparation: Preparing founding documents, applications, and a business plan for the zone administration.
  4. Registration and Licensing: Registering the company in the Public Registry and obtaining the appropriate license (trading, manufacturing, service).
  5. Operational Support: Assisting with opening a bank account and resolving ongoing legal issues.

Why Choose Legal.ge?

Legal.ge is the most comprehensive platform in Georgia, connecting you with lawyers experienced in corporate law and tax issues. The specialists in our database are intimately familiar with the specifics of Free Industrial Zones and have practical experience working with both local and international clients. Find a professional tailored to your needs on Legal.ge and ensure the safe and profitable functioning of your business.

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