Georgia’s Trade Regimes
Prepared by the Georgian National Investment Agency
January 23, 2009
Georgia’s Trade Regimes
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WTO member since 2000
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Simplified customs regime since August 2006
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No quantitative restrictions on trade
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Beneficiary of the EU’s GSP+ Scheme since 2006
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Beneficiary of the GSP Scheme with USA since 2001
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Free Trade Agreement with Turkey
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Free Trade Agreement with CIS countries
Georgia’s foreign trade has been growing rapidly since 2003 as a result of aggressive policy reforms to make it easier and less expensive to trade across borders. In January-November 2008, total trade turnover increased by 25% reaching $7 billion USD, with exports increasing by 28% and imports by 24%. For the last few years, there has also been an upward trend in the number of Georgia’s trading partners, now standing at 132 countries.
Source: Department of Statistics of the Ministry of Economic Development of Georgia
The key features of Georgia’s progressive trade policy include:
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Low Import Tariffs: Import tariffs have been abolished on almost 90% of goods, and only three low rates remain (0%, 5% and 12%) instead of the previous 16. Georgia levies no import tariffs on machinery and equipment. The 12% and 5% import tariff rates are levied on certain types of agricultural products and construction materials. Tariffs are also applied to imports of alcoholic beverages and passenger vehicles.
- No quantitative restrictions (quotas) on imports or exports
- Equal VAT on imported and local goods
- Equal excise tax on most imported and local goods
- Very limited number of export/import licenses and permits required
Georgia offers a number of favorable trade regimes that make it an attractive production platform to serve other markets:
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MFN Tariffs with WTO Members: Most of Georgia’s trade partners are members of the World Trade Organization. Trade relations with them are based on Most Favored Nation (MFN) trade status that provides lower tariffs for WTO members.
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GSP with the USA, Canada, Switzerland and Japan: Georgia benefits from a Generalized System of Preferences (GSP) when trading with the USA, Canada, Switzerland and Japan. Accordingly, lower tariffs are applied on goods exported from Georgia to those countries.
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GSP+ with the EU: Georgia is one of only four CIS beneficiaries (others are Moldova, Armenia and Azerbaijan) of the new EU GSP+ trading regime, and one of only 15 beneficiaries worldwide. GSP+ status allows Georgia to export 7200 products to the EU market duty free.
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Free Trade with CIS Countries: Georgia has a free trade regime with CIS countries resulting in duty free trade of goods and services. CIS countries account for 35% of Georgia’s total exports.
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Free Trade with Turkey: In November 2007, Georgia and Turkey signed a Free Trade Agreement which entered into force on November 1, 2008. The agreement is set to facilitate the increase of Georgian export to its neighboring country, especially in the field of agriculture. FTA envisages entire liberalization of trade on industrial goods as well as essential preferences in the field of agriculture.
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In order to further liberalize its foreign trade relations, Georgia is actively working with the EU, the USA, the European Free Trade Association (the “EFTA”) and the Gulf Cooperation Council to encourage free trade negotiations.
Georgia has an extensive and growing double taxation treaty network:
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Georgia has entered into double taxation treaties with the following countries: Armenia, Austria, Azerbaijan, Bulgaria, Belgium, China, Czech Republic, Denmark, Estonia, Finland, Germany, Great Britain, Greece, Iran, Italy, Kazakhstan, Latvia, Lithuania, Netherlands, Poland, Romania, Turkmenistan, Ukraine, and Uzbekistan.
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Georgia has signed and ratified double taxation treaties (but they have not been entered into force yet) with Germany, Russia, Denmark, Estonia, France, Turkey, Finland and Luxembourg.
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Negotiations with Switzerland, Kyrgyzstan, Kuwait, Ireland, Spain, Israel and Cyprus are currently underway.
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Georgia’s Tax Code offers unilateral protection against double taxation. The tax paid on income or profit received in countries with which Georgia does not have a double taxation agreement may be credited while paying tax in Georgia (up to the amount of the tax assessed in Georgia).
Useful contacts:
- Department of Foreign Trade and International Economic Relations, Ministry of Economic Development
http://www.economy.ge/geo/departments.php?key=6&sub=9
Phone: (995 32) 93-10-53;
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