Doing business

(Last updated: 4 June 2008)

Business etiquette

Business tips

When addressing people, their title and last name should be used unless you are invited to do otherwise.

Handshakes are the customary forms of greeting.

The development of personal relationship is important when having business relationships in Georgia. Business meetings tend to be relatively relaxed. Punctuality is important, so visitors should be on time for business meetings and social gatherings.

Georgian toast making is very important. The toasts need to be said in a specific order.  Wine is never drunk without first some form of a toast being said. Never drink while a toast is being made (unless you are drinking beer) and it is better not to toast when drinking beer.

Family, sports, food, and culture are good topics of conversation.

Yawning in public is considered rude and do not point your fingers at anyone.

When invited to a home for dinner, it is fine to bring a gift for the host or hostess. Australian souvenirs, chocolates, and flowers are welcome gifts.

Business clothing for men is a suit and tie and suits or dresses for women.

Please also note:

Bribery of foreign public officials is a crime. Australian individuals and companies can be prosecuted in Australia for bribing foreign officials when overseas. For more information, go to the Attorney General's Department on foreign bribery.

Tariffs and non-tariff barriers

Customs value of goods for customs clearance is defined based on the customs declaration. Export, transit and re-export of goods are exempt from customs duties and fees. Chapter 270 of the Georgian Tax Code defines the amount of the customs tariffs and exemptions.

A fee of €5 is charged per customs declaration for goods valued below GEL3000: and €60 for goods valued above GEL3000.

Import of goods for personal use of total value of up to GEL300 by land (at the border) and up to US$1500 by air (at the airport) of total 50kg is free from customs duty.

Non-tariff barriers

Georgia has no quantitative restrictions (quotas) on trade. Only medical products, firearms, explosives, radioactive substances, industrial waste and a few types of agricultural chemical products are subject to import/export licensing.

In 2005, the number of permits for import and export was reduced from 14 to 8. Excise taxes and VAT apply equally on imported and domestic products.

Georgia prohibits the import of the following goods: narcotics, pornography and nuclear materials. Weapons and ammunition have complex licensing requirements, and interested parties should contact the Ministries of Justice and Internal Affairs prior to any importation.

Labelling

All cosmetics, pharmaceutical, chemical, processed food and utility products must have Georgian language labelling at the sales point. Alcoholic drinks and tobacco products require excise stamps.

Documentary requirements

Commercial invoice

The following types of customs declarations can be used for customs clearance of goods and vehicles:

• Customs Cargo Declaration
• Physical Entity’s Declaration
• Mail Consignment Declaration
• Special Customs Cargo Declaration

Originals or notary confirmed copies of the following documents (one copy) are submitted to customs authorities together with customs cargo declaration:

• Documents confirming the competence of a declarant to submit the cargo customs declaration
• Transport documents confirming the transfer of goods (shipping documents)
• Contract (agreement) concluded between participant subjects of foreign economic relations or a substitute document
• Invoice
• Document confirming the taxpayer’s identification number (certificate of taxpayer) issued by the tax inspection operator of the taxpayer
• Certificate of Origin of goods issued by the respective agency of an exporter country

Submission of certificate of origin is required to determine whether goods are eligible for preferential treatment or not.

Certificate of origin

The Certificate of Origin of Goods (original or officially attested copy) should be issued by the respective body of importer country and contain the following information necessary for identification of goods:

• Name and address of the importer
• Number of packages, kind of packaging material signs and numeration
• Category of goods
• Gross (total) weight and net weight of goods
• Quantity and volume of goods, used as an alternative when weight reduction is possible during transport or if determination of the weight of goods is impossible
• Transport vehicles and transportation route, if available

The certificate of origin should also contain the sender’s application to confirm that the subject goods comply with the appropriate criteria of compliance.

Taxation

The following customs taxes are applied in Georgia: customs duty, VAT, excise. There are also customs fees for performing customs procedures and issuing licenses.

Customs duty, VAT and excise are levied on goods that are removed from the customs control. Customs fees are paid when removing goods and transportation from the customs control, as well as in cases of international mailing.

Rates of duty on imported goods fall into three bands: zero per cent five per cent and 12 per cent. Nearly 90 per cent of goods benefit from a zero rate of duty. Import of agricultural goods, food products, clothes, and construction materials, which are produced in Georgia, are the main goods that are taxed at the higher rates.

An 18 per cent Value Added Tax (VAT) applies to imported goods. Fixed excise tax rates apply to certain goods such as alcoholic drinks, ethyl alcohol, ethyl petrol for cars, cigarettes, etc.

Income tax is 12 per cent and social security tax is 20 per cent.

Georgian and foreign enterprises engaged in economic activity in Georgia through a permanent establishment and/or receiving income from sources located in Georgia must pay a flat profit tax of 20 per cent. A partnership or a similar enterprise pays the profit tax from the gross income (Clause 206 of the Tax Code).

Intellectual property protection

Although Georgia has signed all relevant treaties and enacted legislation in compliance with its international obligations, as a practical matter protection and enforcement of intellectual property rights is weak in Georgia.

Banking and finance

Georgian banks are steadily gaining a high degree of confidence among the population and institutional investors. Commercial banks of Georgia have expanded their branch networks and diversified services offered to the clients. They introduced customer services based on modern banking technologies and provide internal settlement in real time.

The alignment of international best practices and Georgian standards for licensing and regulation of activities in the banking sector helps to improve banking services in the country, contributes to the further strengthening, stability and effective functioning of the sector, thus protecting interests of depositors and investors. This in turn provides for growth of confidence in the banks. As a Member of the Council of Europe, Georgia enforced legislative measures against money laundering that also required revision of the standards established in the sector.

Dispute resolution

It is recommended that contracts between private parties include a provision for international arbitration of disputes because of deficiencies in the Georgian court system. Litigation can take excessively long periods of time. There is concern about the adequacy of training of judges and about their susceptibility to pressure from the government or other outside influences.