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Investment Climate &Gambling Business Opportunities in Georgia
Georgian National Investment Agency(GNIA)
2015
Area: 69,700 sq km
Population: 4.5 mln
Life expectancy: 75 years
Official language: Georgian
Literacy: 100%
Capital: Tbilisi
Currency (code): Lari (GEL)
Georgia - Country Overview
GDP 2014 (est): USD 16.9 bln
GDP real growth rate 2014 (est): 4.7%
GDP CAGR 09 -14 (USD) (est): 5.6%
GDP per capita 2014(est): US$ 3763
Inflation rate 2014 : 3.1%
Total Public Debt to Nominal GDP (%) 2014 (est): 34.6%
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Advantages of Investment Climate in Georgia
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A politically stable investment destination Efficient, pro-business and corruption-free government Enlargement of market size by Free Trade Agreements Competitive cost of labor and energy Entry gate in the region Solid sovereign balance sheet Stable banking sector Very low crime-rate
BB- Stable BB- Positive Ba3 Positive
Singapore
United States
United Kingdom
GEORGIA
Latvia
Netherlands
Bulgaria
Armenia
Turkey
Russia
Azerbaijan
China
Ukraine
1
7
8
15
23
27
38
45
55
62
80
90
96
Doing Business in Georgia
Ease of Doing Business Index Of Economic Freedom
Source: World Bank, DB 2015 (Rank out of 189 countries)
Hong KongUnited States
United KingdomGermanyGEORGIA
SwedenArmenia
KazakhstanTurkeyFrance
AzerbaijanChina
RussiaUkraine
1121316
2223
52697073
85139143
162
Source: The Heritage Foundation, 2015 (Rank out of 178 countries)
Up from 112 in 2005 Up from 99 in 2005
Country's impressive progress in improving business climate has been well documented in a number of international indices.
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Hungary
GEORGIA
Denmark
Norway
Korea (South)
Canada
Switzerland
UK
United States
Armenia
Turkey
Ukraine
1%
2%
2%
2%
2%
2%
5%
11%
14%
16%
20%
22%
GEORGIA
Global Corruption Barometer
Source: Transparency International 2013 (GLOBAL CORRUPTION BAROMETER)
Georgia is considered as essentially a corruption-free investment destination
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Corruption Free Country
GEORGIA
Denmark
Norway
Korea (South)
Hungary
Canada
Switzerland
UK
United States
Armenia
Turkey
Ukraine
0%
1%
1%
1%
1%
2%
2%
4%
9%
9%
15%
18%
GEORGIAPercentage of users paying a bribe to tax authorities in the past year
Percentage of users paying a bribe in registry and permit services
Favorable public debt situation
Economic Structure and Trends
Broad-based and diversified nominal GDP structure in 2013
Rapidly growing GDP per capitaGDP: Strong rebound after a relatively small contraction in 2009
Source: Geostat, MOF Source: Geostat, MOF
Source: Geostat, MOFSource: Geostat, MOF
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Agriculture, forestry and fishing9%
Industry17%
Construction7%
Trade17%
Hotels and restaurants2%
Transport and Communica-tion11%
Financial intermediation3%
Public administration10%
Education5%
Health and social work6%
Other sectors12%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%
10%
20%
30%
40%
50%
60%
70% 63.2%
50.5%
40.0%
32.0%25.5%
31.2%
41.0% 42.4%36.5% 34.9% 34.7%44.9%
34.5%26.8%
21.1%16.8%
23.5%
31.7% 33.6%28.8% 27.6% 27.2%
Total Public Debt to Nominal GDP (%)External Public Debt to Nominal GDP (%)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E
02468
1012141618
-8.0%
-3.0%
2.0%
7.0%
12.0%
5.16.4
7.810.2
12.810.8 11
14.415.8 16.1 16.9
5.9%9.6% 9.4%
12.3%
2.3%
-3.8% 6.3%7.2% 6.2%
3.2% 4.7%
Nominal GDP (US$bln) Real GDP growth, y-o-y (%)
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E
0500
1000150020002500300035004000
11881484
17642315
29212455 2623
32313523 3600 3763
Liberal Trade Regimes
Preferential Trade Regimes:• FTA with CIS countries and Turkey • DCFTA (Deep and Comprehensive
Free Trade Agreement ) with EU was singed on June 27, 2014
• GSP agreement with USA, Norway, Switzerland, Canada, Japan
• Member of WTO
• Very simple and service oriented customs policy and administration – customs clearance in 15 minutes
• ~80% of goods free from import tariffs• No quantitative restrictions
Duty free access to ~0.9 billion marketprovided by FTAs and DCFTA
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Before Current Change year
Number of Taxes 21 6 2005-2007
VAT 20% 18% 2005
Personal Income Tax
12-20% 20%
2004 - 2009
Social Tax 33% -
Corporate Profit Tax 20% 15% 2008
Customs/import Tax 0%, 5% or 12%
Excise Tax Depends on goods
Property Tax Up to 1%
No payroll tax or social insurance tax
No capital gains tax
No wealth tax and inheritance tax
Personal income tax for interest, dividend, royalty – 5%
Foreign-source income of individuals fully exempted
Accelerated depreciation on capital assets
Loss carry forward for corporate profit tax purposes (10 years)
No restrictions on currency convertibility or repatriation of capital & profit
Double taxation avoidance treaties with 47 countries
Taxation - simple, low, efficient and fair
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According to the latest Tax Misery & Reform Index, released by Forbes Business & Financial News, Georgia is the fourth least tax burden country after Qatar, UAE and Hong Kong
Leader in Forbes rating (Tax Misery & Reform Index)
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Georgia is expecting significant growth trajectory in tourist arrivals
Number of international visitors has been growing rapidly
2005 2006 2007 2008 2009 2010 2011 2012 2013
0.61 1.1 1.3 1.5
2.0
2.8
4.4
Source: Georgian National Tourism Administration
+38%
+56%
+22% 5.4
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Hospitality - Fast Growing Sector
Fast growing sector• Tourism contributed 6.5% of GDP in 2013.• Number of visitors increased by 38% reaching 2.8 million in 2011 and by 56% in 2012 reaching 4.4 million.
Georgia had 22% more visitors in 2013 reaching 5.4 million. Number of international arrivals reached 4 657 525 mln during the first 10 months of 2014. (2% increase compared to the same period of the last year).
• Majority of tourists come from: Turkey (30%), Armenia (23%), Azerbaijan (19%), Russia (14%), Ukraine (2%). • Tourist number of international visitors from Europe increased by 3 % in 2014 • Average duration of stay - 5 nights, average spend - USD 650
Potential• European Youth Olympic Festival 2015; UEFA Super Cup 2015.• UNESCO heritage sites; 8 national parks • Curative climate; mineral waters;• According the IUCN criteria there are 84 different categories of Protected Areas(Total area – 520 811 ha; 7,47% of
the country’s territory)
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Source-Georgian National Tourism Administration
More international luxury hotel chains are coming to the market…
Existing Hotel Chains (8 pipeline hotel projects in Tbilisi)
With the growth of tourists the demand for hotel rooms has been growing in the last years in Georgia, which has stimulated investments in the hotel sector.
Average occupancy rate of international brand hotels in Tbilisi Reached to 80% in 2013 , Tbilisi hotel market is expected growth this year of an estimated 83%;
Supply of the rooms increased, but still there is a huge capacity for development of Hotel Industry.
Upcoming international hotel brands in Georgia
Batumi
Tbilisi
Batumi
TbilisiBatumi
Tbilisi
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Tbilisi/Likani
Source: TBSC Consulting
Investment opportunities in Hospitality & Real Estate
Expansion of summer ”sun and beach” franchise focusing on high-end segment
All inclusive summer resorts
New master resort development
Description
Potential location
Batumi Anaklia Kobuleti Other Black Sea
locations
Mestia Gudauri Bakuriani Goderdzi
Master development of winter resorts with unique profile equivalent to the Alps
Government is fully committed to provision of basic infrastructure
Four season resort value preposition
Majestic landscapesallow for a wide range of tourism activities such as camping, climbing, rafting, fishing, hunting etc.
Development of Spa Resorts
Include hotels, different types of clinics, fitness, outdoor activities
4
Tskhaltubo Akhtala Other locations
3
“Sun-beach” resorts
Winter ski resorts
Summer mountains resorts
SpaResorts
Development of large-scale integrated casino complex to Serve regional markets.
Include hotels, casino entertainment, family Services and shopping
Fiscal incentives available
Batumi Tbilisi Other locations
Gambling
5
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2
Mestia Gudauri Bakuriani Goderdzi Kazbegi Other locations
1
Map of Regional Countries Fully of Partially Banning Gambling Activities
14
• Legislation in surrounding countries prevents people from enjoying gambling facilities, but Georgia will provide them with high quality gambling experience similar to world class gambling destination as Las Vegas or Monte Carlo
• Countries where gambling is completely or partially prohibited: Russia, Turkey, Azerbaijan, Iran, Israel, Kazakhstan, Saudi Arabia etc.
• Easy access by Land, Sea and Air makes Georgia attractive gambling destination for all above countries and beyond.
• Gambling business is fully decriminalized.
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Gambling Business in Georgia
• There are couple of choices for starting Gambling Business in Georgia: Casino Slot Machines Table Games Bookmaker Bingo Lotto Promotional Drawing Game
• Georgia Revenue Service (Tax and Customs Administration of Georgia) is responsible for issuing permits, regulation and supervision of gambling business
15
Casino Fees
Annual fees:• 5 000 000 GEL (with exceptions)
• These exceptions vary according to the location of the company: Batumi, Kobuleti, Borjomi, Bazaleti Lake, Gurjaani district, vill. Katchreti – 250 000 GEL
Akhaltsikhe – 100 000 GEL
Some of the regions are totally exempt from annual state fees: Gudauri, Khazbegi, Bakuriani, Sighnagi and Tskaltubo – are totally exempt from annual fees with no
conditions
Batumi, Kobuleti, Khelvachauri, Anaklia and Ganmukhuri are exempt from an annual fee on a condition
that the casino will operate in newly opened 100 or 80 room hotel
Quarterly fees:• For each Casino Table - 15 000 - 30 000 GEL (Tournaments tables are not subject to quarterly fees )
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Exempt from annual fee + 100 Room HotelExempt from annual fee + 80 Room HotelExempt from annual fee with no conditions250000 GEL annual fee100000 GEL annual fee
17
Casino Fee Payment Map
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Other Gainful Games Fees
18
Slot MachinesAnnual State Fees: 50 000 – 1 000 000 GEL (Tbilisi – 1 000 000 GEL)In case of locating slot machine club within Casino in Tbilisi: 100 000 GELQuarterly Fees: For each Slot Machine: 1500 – 3000 GEL
Table GamesAnnual state fees:Only Casino permit and gaming machine permit holders are allowed to open table gaming clubCasino Permit holders are allowed to open 3 Gaming Clubs in any part of Georgia for freeGaming Machine Permit holders are allowed to open 1 Gaming Club in any part of Georgia for freeEach following Gaming Club: 10 000 – 50 000 GEL Quarterly fees: For each Table in Table Game: 3 000 – 10 000 GEL
BookmakerAnnual state fees: 30 000 - 300 000 GELQuarterly fees: Free
Bingo/LottoAnnual state fees: 15 000 GEL Quarterly fees: Free
Promotional Drawing GameAnnual fees: 15 000 GELQuarterly fees: 10% of Prize Fund
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Land Based Gambling and Gainful Games Taxing
• Casino Personal income tax (salaries) – 20%; Property tax – up to 1%; Corporate Income Tax– 15%; W/H - only during
tournament – 20%;
• Slot Machines Personal income tax (salaries)– 20%; Property tax – up to 1%;
• Table Games Personal income tax (salaries)– 20%; withholding liability- only during tournament – 20%; Property tax – up to 1%;
• Bookmaker Personal income tax (salaries) – 20%; Property tax – up to 1%;
• Bingo/Lotto Personal income tax (salaries)– 20%; Corporate Income Tax– 15%; withholding liability – 20%; Property tax – up to
1%;
• Promotional Drawing Game Personal income tax (salaries) – 20%; Corporate Income Tax– 15%; withholding liability – 20%; Property tax – up to
1%;
iGaming Permits
• iGaming permit is only issued to the land-based permit holders (of Georgia).
• Gambling and gainful games may be arranged by internet for: Casino Slot machines Bookmaker Promotional Drawing Game
• A company in Georgia is prohibited from providing iGaming services to an offshore company
• iGaming permit holders pay quarterly fees. Quarterly fees are determined by Local Administrations, which vary from 30000 to 60000 GEL
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iGaming Taxation
• Casino
Personal income tax (salaries)– 20%, Corporate Income Tax – 15%, property tax – up to 1%,
withholding liability– only during tournament -20%
• Slot Machines
Personal income tax (salaries) – 20%, Corporate Income Tax – 15%, Property tax – up to 1%.
• Bookmakers 5% of the turnover (gross revenue). Personal income tax (salaries) –20%; property tax–up to 1%.
• Promotional Drawing Game personal income tax (salaries)– 20%; property tax – up to 1%, Corporate Income Tax– 15%; withholding liability - 20%
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GEORGIAN NATIONAL INVESTMENT AGENCY
• STATE AGENCY
– Promoting Georgia internationally
– Supporting foreign investments and investors
before, during & after investment process
• “One-stop-shop” for investors
• Moderator between Investors,
Government and Local Companies
LocalCompanies
Investors
Government
GNIA
Mission - Attracting Greenfield and M&A Investments
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WHAT YOU CAN GET FROM GNIA
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• INFORMATION - General data, statistics, sector researches
• COMMUNICATION - Access to Government at all levels/Local partners
• Organization of site visits & Accompanying investors
• AFTER CARE - Legal advising & Supporting services
24
GEORGIAN NATIONAL INVESTMENT AGENCY
7 Bambis Rigi, Business Center Mantashevi,
II floor 0105, Tbilisi, Georgia
Tel: (+995 32) 2 473 696
E-mail: [email protected]
www.investingeorgia.org