INITIATIVES AND LEGISLATIVE AMENDMENTS FOR PROMOTING BUSINESS ACTIVITIES IN GEORGIA

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1 MGALOBLISHVILI KIPIANI DZIDZIGURI (MKD) Newsletter II, February 2016 INITIATIVES AND LEGISLATIVE AMENDMENTS FOR PROMOTING BUSINESS ACTIVITIES IN GEORGIA

2 Proposed Tax Reform The tax policy is shaping up to be one of the major issues of the Prime Minister s agenda for The Georgian Government proposes to implement the so called Estonian model of taxation, which implies the profit tax exemption and taxation only for the distributed profit. Expected positive outcomes of the proposed tax reform include: Acceleration of the economic development. Increased availability of financial resources for small and medium-sized business. Increase of capital and decrease of external financial restrictions. Positive effects on the Georgian investment climate. In addition to the above, the Government of Georgia plans a range of amendments for making the tax administration more business friendly, such as: Seizure of the bank accounts only based on the respective court ruling. VAT exemption in case of importing the fixed assets for the companies, using them in VAT taxable operations. 2

3 Georgian Government Plans to Remove Bureaucratic Barriers The Prime Minister of Georgia suggested introducing One Stop Shop for public services, as a way of providing the citizens with a single access point to information and public service transactions with improved efficiency. One Stop Shop for public services proposed by the Government is the easiest way to simplify bureaucratic procedures for business the business ombudsman Giorgi Gakharia said commenting on the Prime Minister s initiative. According to Giorgi Kvirikashvili, all kinds of public services for businesses should be carried out in one place. One Stop Shop refers to both physical and digital space, reducing the bureaucratic procedures, which are currently causing problems for the business. 3

4 Georgia has Abolished Visa Regime with Iran Starting from February 15, 2016, the citizens of Iran are able to visit and stay in Georgia for 45 days without entrance visas. The Georgia-Iran Chamber of Commerce and Industry expects that the visa free regime will activate tourist inflow to the country. The Chamber also expects inauguration of major investment projects in Georgia. The visa regime abolition will reap serious benefits for the country, economic experts assert. 4

5 Royal Building Georgia will Invest in Constructing Snostskali Hydro Power Plant Royal Building Georgia plans to construct Snostskali hydro power plant (HPP) in the Mtskheta-Mtianeti Region. Royal Building Georgia won the interest expression for conducting feasibility studies, construction, ownership and operation of Snostskali HPP. The project s estimated investment value is 37.8 million USD. 5

6 Ryanair May Enter Georgia Possibilities of initiating routes to Kutaisi were discussed during the business meeting between Prime Minister of Georgia Giorgi Kvirikashvili and the Chief Commercial Officer of Ryanair David O Brien. The growth of interest of low cost airlines to Georgia is caused by the business environment in the country, growth of the tourist flow during the recent years, and the possibilities provided to the Georgian citizens by the prospects of visa liberalization with the EU. David O Brien expressed his hopes that the negotiations and consultation with Georgian government will lead to positive results. 6

7 Arab Investors Planning to Launch Valley City Project Implementation in Tabakhmela Green Valley International Real Estate Group, one of the major real estate companies of Saudi Arabia, will launch implementing Green Valley City Project in Tabakhmela in two months. The General Manager - Ali Saed Al Salam explained that Georgia is one of the attractive destinations for the real estate market development in Europe with its natural environment, social-economic stability, developed infrastructure and tax incentives. The Project investment value is 136 million USD. 7

8 Israeli Investors will Spend More than 100 Million USD in Georgia According to the President of Georgian-Israeli Business Chamber - Itzik Moshe there are 6 investment projects contemplated by Israeli businessmen in Georgia. Five of these projects were planned during the Tbilisi Mayor s visit to Israel. These are mainly real estate projects, including the development of hotels (Gergeti, Art Hotel, boutique-hotel Rustaveli), aparthotels and a business center. The volume of investments amounts to more than 100 million USD, with 40% going to the project Rixos. - notes Itzik Moshe, stressing the importance of Israeli investors activities in Georgia. 8

9 This Newsletter contained herein is of general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advise after a thorough examination of the particular situation. FOR FURTHER INFORMATION PLEASE CONTACT: Victor Kipiani Partner vkipiani@mkd.ge Tel.: /81 David Archvadze Lawyer darchvadze@mkd.ge Tel.: /81 9