Free Trade Zone (also known as Free Industrial Zone - FIZ) advisory is a strategically important service for companies wishing to benefit from the unprecedented tax incentives available in Georgia. Georgia hosts several Free Industrial Zones (Poti, Kutaisi, Tbilisi, Hualing), where registered companies, so-called FIZ Enterprises, enjoy a 0% rate on profit, dividend, and property taxes. However, this regime is not universal and comes with strict regulations and restrictions, especially regarding the type of activity and trading with the Georgian domestic market. An improperly structured business in a FIZ can lead to the revocation of tax status or the imposition of additional import taxes. Therefore, a detailed legal and tax analysis is essential before entering the zone.
What Does Free Trade Zone Advisory Cover?
Specialists on Legal.ge offer full support from initiating activities in the FIZ to operational management. The service includes:
- Zone Selection and Analysis: Comparing conditions, tariffs, and logistics capabilities of different zones (Poti, Kutaisi, etc.) to select the best option for your business.
- Licensing and Registration: Registering the company and obtaining the relevant license (manufacturing, trading, service) from the zone administration.
- Customs Procedure Management: Planning customs regimes for the entry of raw materials and exit of products, which is critical for operating within the zone.
- Certificate of Origin Acquisition: Managing the process of obtaining the "Made in Georgia" certificate, which allows tax-free export of products to Europe and China.
- Tax Compliance: Managing the 4% tax arising from the sale of products to the domestic territory of Georgia and other obligations.
Common Situations and Scenarios
The biggest risk for FIZ companies is related to the misinterpretation of "permitted activity." For example, a company registers in a FIZ to provide IT services to Georgian companies. By law, a FIZ enterprise is prohibited from providing services to Georgian residents, which automatically leads to the revocation of tax benefits and taxation under the standard regime. A second scenario involves the Certificate of Origin: a company imports finished products, merely packages them in the zone, and wants to export them as Georgian products. If the degree of processing is insufficient, the certificate will not be issued, complicating exports. Customs issues are also frequent when goods leaving the zone are incorrectly declared, leading to VAT charges.
Georgian Legal Framework
The field is regulated by the Law of Georgia on Free Industrial Zones and the Tax Code of Georgia. These acts define incentives (0% profit tax) and prohibitions (e.g., arms production and residential construction are banned). Also important are Government Resolutions regarding the creation and functioning rules of specific zones. Customs procedures are regulated by the customs part of the Tax Code, establishing a special regime for bringing goods in and out of the zone.
Step-by-Step Service Process
Engagement with a specialist on Legal.ge begins with a business plan audit—how well your idea fits the FIZ concept. In the first stage, negotiations are held with the zone administrator regarding lease and license terms. In the second stage, the lawyer prepares registration documents and registers the company. The third stage involves opening a bank account (which is complicated for FIZ companies and requires a special approach) and customs registration. After operations commence, the specialist ensures monthly tax and customs declarations.
Why Choose Legal.ge?
Working in Free Industrial Zones requires not only legal but also logistical and customs expertise. On the Legal.ge platform, you will find specialists who have direct contact with zone administrations and know the specifics of each zone (e.g., Poti is focused on heavy industry, Hualing on light trading). Our experts will help you avoid bureaucratic barriers and fully utilize the advantages of the tax haven while fully complying with the law.
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