Singapore, Cyprus, China, the Netherlands — countries that come to mind when it comes to offshore locations for IT companies. But in this article, I will tell you about a country that borders Russia and surprisingly offers very attractive conditions for startup companies in the information technology sector. Tested personally! Shall we get started?
Gamarjoba, genatsvale!
The need to open our IT company was prompted by the launch of the mobile game CubenatiK, whose ideational inspirer and main developer was our son, who at 13 wrote all the code for this puzzle.
Adventurous by nature, we decided to combine the pleasant with the useful in our work: to go on a journey while simultaneously finishing the game and dealing with registration issues. After exploring the possible and available options for us, we settled on the most unconventional — Georgia.
At the time of our departure, only one source on the internet provided detailed information about the working conditions for Georgian IT companies. This information was sufficient for us to embark on a two-month business trip to Tbilisi and verify the innovations of this country through our own experience.
So, the main benefits for Georgian IT companies are:
- company registration in 2 days
- free bank account opening
- no financial monitoring
- obtaining the status of 'virtual zone entity'
- tax exemption, except for 5% on dividends
- 2 months of free accounting services
- very cheap fruits, vegetables, transport, accommodation, and entertainment — a great bonus to the above
Startup company registration
The entire registration process takes two days from the moment you submit documents to the Tbilisi House of Justice (also known as the Public Service Hall). It is one of the most famous futuristic buildings with a petal-shaped roof, which can be seen in most panoramic photographs of the Georgian capital.
To open a company, you will need the following documents:
- Passport.
- Charter in Georgian and Russian (and in some cases in English).
- Legal address.
You are unlikely to encounter difficulties with the first point, but I will elaborate on the next two.
You can request the standard charter in both languages from the consultants at the Justice House. It will contain the minimum information you need to fill out: ownership type, company name and address, founder, area of activity, and contact details. However, if you are not a native Georgian speaker, a translator must complete the charter and make any necessary changes.
The issue of the legal address also depends on your personal preferences and capabilities. As confirmation, a document of ownership, lease agreement, or permission to use the address is required. Naturally, this must be in the Georgian language.
If you do not intend to rent office space and do not plan to make significant changes to the charter, the registration process will be greatly simplified. All you will need to do is visit the Justice House.
At the entrance, you will encounter local citizens offering numerous services for foreigners: from rental housing and tourist trips to notarial services. You will certainly be offered assistance with document translation and providing an address for registering your company. Don’t be afraid, and trust me, you will save a tremendous amount of time.
We did just that. After we familiarized ourselves with the list of necessary documents and studied the standard charter, a girl approached us as we were leaving the Justice House and offered to translate the documents and provide a legal address for the organization for 100 lari. She took us to a café located on the first floor of the institution, prepared the charter, the lease agreement, and invited a staff member from the Ministry of Justice.
This is how the first page of our Charter looks.
Here you can review the full text of the document.
Permission to use the address.
The specialist accepted all the documents, scanned the passport, prepared the application for opening a legal entity, and the receipt for the state duty (130 lari). After that, she assured us that an SMS notification would be sent to the phone on the day the finished documents could be picked up at the Justice House.
Application for opening an LLC.
Bingo! The entire procedure took us less than an hour, cost 230 Lari, and was conducted in very comfortable conditions over a cup of tea. Exactly two days later, we received a text message informing us that the legal entity is registered and the documents can be picked up.
Bank account
The next step in registering an IT company in Georgia is to open an account.
On the first floor of the Justice House, there are branches of three banking institutions: Bank of Georgia, TBC Bank, and Liberty Bank. TBC is considered the most loyal, and that’s who we started working with.
Opening an account for a new company will be free, but if you choose to order a corporate card, you will have to pay for its annual maintenance. You can manage the business account remotely, as access to internet banking and a mobile app is provided.
TBC Bank has also developed advantageous lending conditions and intangible support . However, you can only participate in this program if you have a Georgian residence permit or if the director and co-founder of your firm is a Georgian citizen with a 51% stake in the joint business. This detail must be recorded in the Charter.
In addition, Georgia is not a participant in the international automatic exchange of financial information system, so Georgian bank accounts and transactions will not be disclosed to Russian and other foreign tax authorities. At the same time, money from corporate and personal cards can be withdrawn at any ATM in the world.
Registration in services
After submitting documents to open a firm at the Justice House, all available information about your company will become accessible to you: document scans, registration status, etc.
All documents are available on the website for public access.
I recommend saving the scans, as you will need to repeatedly copy and paste data in Georgian later. Most services you will work with require filling out forms in the local language.
Extract from the register of legal entities of Georgia
One of the first will be the Georgian tax service, where you need to register after receiving the company's documents at the Justice House. The process is fairly simple, but as mentioned earlier, data must be entered in Georgian.
Once the registration is complete, you will receive an email invitation to visit the tax office to confirm your electronic signature. I would like to warn you: the sent letter is generated automatically, and the branch address is based on the location of your registered legal address.
You may encounter a situation where the proposed tax office is not operational. We were invited to the tax office on Marjanishvili, but upon arrival, we found that the building has been closed for repairs for a long time. As a result, we had to go to the office on Meraba Kostava, near the Polytechnic Institute. It is worth noting that the electronic queue at these offices is quite quick, and most employees speak Russian very well.
Congratulations! From this moment, you become an official taxpayer in Georgia :)
After confirming your electronic signature, you will gain full access to your personal account on the tax website. Before starting work, you should open all documents located in the 'Incoming' folder. This is a simple formality. The emails contain information about all laws applicable to legal entities since 2008: licenses, taxation, announcements, etc.
After that, you enter the 'taxpayer information' section and select the OKVED codes corresponding to the company's activities, and in the 'Branches/Services' section, you fill in the information about the legal address.
Here you select OKVED
And here you enter the address information
‘Virtual Zone Entity’
Now you can start legalizing the right to use ‘Virtual Zone Entity’. To do this, you need to obtain an electronic certificate.
At In the Ministry of Finance of Georgia, you enter the login and password linked to the tax account. A page will open with already filled personal information. You will then need to enter your email and your Georgian phone number. In the 'Request' section, briefly describe the type of activity of the company, planned projects, and submit the online application. You will need to write in Georgian, so Google Translate will be helpful.
Typically, obtaining the certificate takes about ten days. It was issued to us three days after submitting the application. The certificate is issued only in electronic form and is always available on the website newzone.mof.ge.
This is our virtual access to offshore opportunities.
What is the magical status of 'Virtual Zone Entity'?
This status is granted exclusively to companies operating in the field of information technology in Georgia. Any activities related to IT are conducted under the legislation.
IT startups are exempt from paying taxes, except for:
- 5% — dividend tax
- 20% — income tax on employees
- 2% — pension fund tax on resident employees
However, if you do not officially employ staff, and especially if there are no Georgian residents in your team, there is no need to pay any taxes except for the 5% on dividends.
It is important to remember that this tax system applies only if your company's income comes from foreign countries.
For example, in our case, where the counterparties are foreign companies like Unity, AppLovin, etc. But if you decide to work for a Georgian client, including a branch of a foreign company in Georgia, the income received from this deal will be subject to standard taxes: 15% on profits, 18% VAT.
Keep these points in mind when signing contracts.
Accounting Support
Because none of us wanted to handle the hassle of accounting, and no significant transactions are expected yet, we decided to hire a local accountant on an outsourcing basis. The peculiarity of our cooperation was that we received the first two months of support for free, after which a rate of 500 lari per month applies. In the future, the payment may change depending on the volume of work. Therefore, I can't provide detailed recommendations regarding independent accounting.
Challenges
Despite all the advantages and benefits of opening an IT business in Georgia, we encountered some challenges that you won’t read about anywhere.
Google still does not allow Georgian developers to earn income from advertising and publishing any paid applications in its store. There is also no way to work with Google AdWords, as you won’t find Georgia when selecting your country.
Unfortunately, we only learned about this through our own experience while already in Tbilisi and registering an LLC there. However, since CubenatiK is a free game, and monetization occurs through advertising, we solved the income and marketing issue by using other ad networks: Unity, AppLovin, Chartboost.
As for Apple: we have not yet launched the game in the App Store, so we cannot accurately assert the earning opportunities for developers in Georgia. However, it is known that Georgian users of Apple products face difficulties using the store. Many games and applications are unavailable to them, and it is often impossible to make in-game purchases.
While in Tbilisi, we tried to find out the reasons for such a situation regarding what seems to be a trivial issue, but we did not receive any reasonable answers. According to local officials and bankers, the situation will be resolved in the near future.
If you intend to open a business in Georgia and get involved in the development and publication of applications, be sure to keep an eye on the information about changes in Apple and Google for Georgian developers!
Housing
Since we planned to stay in the Georgian capital for at least a month, renting a place on a short-term basis was not the most profitable option for us. There was also no need to rent an apartment for too long, for example through myhome.ge (the Georgian equivalent of Avito).
To start, we tried to find apartment owners on Airbnb who would not refuse a one-month stay at a reasonable cost. Three hosts agreed to our terms, and we chose the most suitable three-room apartment near the metro for 800 lari per month. We did not have to pay extra for utilities.
If you decide to use this method for searching for housing, consider the seasonality. It may be harder to find an apartment this way during the summer months.
Depending on your budget, you can find many interesting accommodation options in Georgia: from luxurious hotels in trendy areas of Tbilisi to couchsurfing services that allow you to get closer to the hospitality of the locals.
Power
A 20-minute walk from our home was one of the largest markets in Tbilisi — the Dezerter Bazaar. In addition to the fact that prices at Georgian markets are significantly lower than in stores, they also differ greatly from Russian prices for fresh produce.
Considering that we arrived in Georgia in the fall, we were fortunate with the seasonal variety of vegetables and fruits, which averaged about one lari (a little over 21 rubles) per kilogram. Therefore, if you want to enjoy fresh, ripe feijoas, mandarins, persimmons in the mornings, drink pomegranate juice, and prepare fragrant vegetable salads for lunch, October in Georgia is waiting for you.
Price tags indicate amounts in Georgian tetri (1 lari = 100 tetri)
Here are a few more photos from the Dezerter Bazaar
There, at the covered markets, I recommend buying frozen khinkali, which are not much inferior in taste, quality, and ingredients to those served in restaurants, and they are very easy to prepare at home. This way, you will save a considerable amount of money.
For comparison, a portion of 5 khinkali in a restaurant will cost you about 6 lari. For the same amount at the market, you can buy five times more of your favorite dish..
Can you smell that?)
Transport
Public transport and taxis are also very cheap compared to Russian prices. A single card is used for the metro and surface transport, costing 2 lari. At any time, you can return the card with the receipt at any metro ticket office and get back the 2 lari you paid. The fare costs 0.5 lari on all types of urban public transport.
To call a taxi, it is most convenient to use Yandex's services, which offer quick car dispatch and favorable rates.
Various car rental companies and services also operate in Tbilisi. We managed to use the car-sharing service AiCar, which has a fleet consisting only of electric vehicles like Renault Zoe and Nissan Leaf. To use the car, you need to download the app and upload your passport and driver's license.
Users must meet mandatory conditions: being over 21 years old and having more than two years of driving experience. At AiCar, there's also a rule that cars can only be used within the city limits and Mtskheta. However, to see the sights of ancient Mtskheta and enjoy the surrounding panorama from the heights of the ancient Jvari Monastery, renting such an electric car would be the perfect solution. We spent 4.5 hours behind the wheel of such a Nissan and traveled 71 kilometers, paying 50 lari for our brief journey.
View of the city of Mtskheta and Jvari Monastery
What to see
Mtatsminda, Narikala, Abanotubani, Sololaki, Metekhi, Svaneti, Alaverdi, Kakheti, Vardzia, Batumi, Ananuri, Ushguli, Kazbegi — you won't be bored in Georgia on the weekends. It's like a treasure chest, hiding a vast number of ancient, breathtaking sights, natural beauty, and warm hospitality.
And finally…
Our family business trip to Georgia lasted two months: from October to December. During this time, we managed to resolve all legal issues regarding the opening of our IT firm, the child finished work on CubenatiK, and we had a wonderful time in an unfamiliar country, combining the launch of the game with relaxation and travel.
And now, summarizing the trip, it should be noted that Georgia is only at the beginning of its journey in developing the IT sector, which means there will be challenges in the work. Nevertheless, the Georgian government has provided unprecedented conditions for doing business in the information technology sector.
Tax incentives, the absence of corruption and bureaucracy, quick and clear legal processes, and no financial monitoring — all of this positively influences the productive activities of IT companies. This means that Georgia has every chance to become one of the advantageous offshore zones on the global stage.
Good luck with your IT achievements!!!
Source: habr.com
