Incentives

From 2016 the Government of Georgia provides financial and technical assistance to entrepreneurs involved in hotel industry in all regions of Georgia except Tbilisi and Batumi cities

Co-financing of Franchise/Management Contracts and Development of International Brand Hotels

Government co-finances franchising/management agreement fees for the first 2 years
Upper limit of the co-financing amount is GEL 0.3 million annually

Co-Financing of Loan Interest Rate

Government subsidies 10% interest rate for loans in GEL and 8% for loans in USD/EUR
Interest rate co-financing continues for the first 2 years
Minimum loan amount – GEL 0.5 million (or equivalent in USD/EURO)
Government provides collateral guarantee for 50% of the total loan and for the first 4 years
In case the company uses International Franchise/Management Contract, maximum loan amount could be GEL 5 million (or equivalent in USD/EURO). If not, maximum loan amount is GEL 1 million (or equivalent in USD/EURO)
In case the company uses International Franchise/Management Contract, upper limit of government collateral is GEL 2.5 million (or equivalent in USD/EURO). If not, upper limit is GEL 0.5 million (or equivalent in USD/EURO)

Georgia has two unique Free Tourism Zones Anaklia and Kobuleti. The Government of Georgia offers to interested investors unprecedented terms for the construction of hotels along the seaside that has the best climate conditions:

Free land – The land plot is granted to an investor for a symbolic price 1 GEL

Exemptions from Property and Profit Taxes – hotel activities are exempted from Profit and Property taxes until 2026

Free casino license for hotels which have over 80 rooms

Pre-packaged hotel projects

Ready infrastructure – necessary infrastructure, such as electricity, water, gas, savage, is provided by Government

Anaklia-Ganmukhuri FTZ

Anaklia is a new resort on the Black Sea coast. The lands that will be handed over to investors are located alongside the boulevard which was designed by Spanish architect Alberto Domingo Cabo. Ananklia is famous for its summer international music festival GEM fest.

Kobuleti FTZ

Kobuleti is an already established, traditional seaside destination for international visitors. The town is 25 km away from the most popular seaside city Batumi and 30 minutes from Batumi International Airport. Kobuleti Free Tourism Zone includes 12 ha area for the development of ~30 hotels (140 meters from the sea coast).

Four Free Industrial Zones (FIZs) operate in Georgia in the following cities: Poti (sea port), Kutaisi (third largest city) and Tbilisi (capital city). Businesses registered in Free Industrial Zones benefit from certain tax exemptions:

• If a company produces goods for export in FIZ, it is exempt from all taxes except Personal Income Tax (20%), which is paid from employees’ salaries.
• If a company imports products from FIZ to other territory of Georgia, in addition to Personal Income Tax, it has to pay VAT and 4% of revenue from national sales.

All Free Industrial Zones (FIZs) are operated by private companies and investor should rent a space from FIZ operator:

1. Poti FIZ is operated by Rakia Georgia FIZ LLC
2. Kutaisi FIZ #1 is operated by Georgia International Holding (LLC Fresh Georgia)
3. Kutaisi FIZ #2 is operated by Hualing Group
4. Tbilisi FIZ is operated by Tbilisi Free Zone JSC (subsidiary of BitFury Group)

Government started two new projects which support agriculture development in Georgia:

Cheap agro-credit program has been initiated by the Ministry of Agriculture in 2013. 11 major banks are involved in this program, where part of loan interest payments is subsidized by APMA (under the Ministry of Agriculture).

Cheap agro-credit program includes two types of loans:

• Credit for capital assets (12,000-600,000 USD) – rates are between 12-15% and APMA covers 11%.

• Credit for working capital (2,000-100,000 GEL) – rates are between 14-15% and APMA finances 8%.

Grants for agro processing companies – new agriculture processing factories (minimum value of project 200,000 USD) can get grant (maximum 500,000 GEL and 40% of total project) from the APMA. However grant should be used only for purchasing of capital assets (excluding land and buildings) and/or training & technology implementation. Additionally factory should use local raw materials and labor. The project supports only specific sectors and specific regions (production of wheat flour, wine and other alcohol beverages aren’t covered by this scheme).

Official website: www.apma.ge

Project “Produce in Georgia” aims to encourage manufacture and agriculture industries in Georgia, and it offers two main incentives: financial resources and infrastructure (land, building, etc.):

Support with financial resources: If company gets a loan from the bank, Government can finance part of interest payment. However credit amount should be between 150,000 – 2,000,000 USD for manufacturing projects and 600,000-2,000,000 USD for agricultural projects. Credit interest rate is between 11-13% and the government co-finance amount is 10% (covers only first 24 months). 80% of loan should be used for purchasing of capital assets.

Support with infrastructure: If company agrees on certain investment obligation and it invests in new project (new factory or enlargement of existing one), it can obtain a state owned immovable property with free of charge. Investment obligation states that the enterprise should invest at least 6 times more than the market price of the property in Tbilisi and 4 times more than the market price of the property in regions

REFERENCES:  INVEST IN GEORGIA