Import and Export for Business in Georgia: Duties, VAT and Free Zones

Most goods enter Georgia duty-free, but importers pay 18% VAT at the border on almost everything. Exports carry no duty at all, and some foreign manufacturers set up a warehouse or factory in one of Georgia's free industrial zones to take advantage of its customs regime.

Customs Duty: Nothing to Pay on Most Goods

Roughly 90% of goods enter Georgia duty-free. The rest are charged one of two rates, 5% or 12%, and they are mostly agricultural products, food and building materials.

Georgia has no export duties at all, so nothing is owed to customs when goods are shipped abroad.

Import VAT: 18% at the Border

VAT of 18% applies to almost every import, whether or not duty is due and whatever the company's turnover; the Tax Code exempts only specific goods, such as medicines and passenger cars. It is calculated on the customs value (the price paid plus international freight and insurance to the Georgian border) plus import duty, and for excise goods such as alcohol and tobacco the excise tax is added as well.

Since duty is part of the base, the VAT bill comes out higher than a flat 18% of the invoice. On goods with a customs value of $10,000 and a 12% duty rate, you pay $1,200 in duty and then 18% VAT on $11,200, which comes to $2,016 instead of $1,800.

What happens to that VAT afterwards depends on registration. A registered VAT payer claims it back as input VAT on the regular return, while an unregistered company absorbs it into the cost of the goods.

Registration is mandatory once turnover exceeds 100,000 lari in any 12-month period. Customs has no special version of these rules: the threshold and monthly filings are the same ones that apply to business bookkeeping in Georgia generally.

What Must Be Declared and What Needs a Permit

Personal shipments get a duty-free allowance: parcels to Georgia worth up to 300 lari and weighing no more than 30 kg come in without duty. Commercial goods don't qualify, and anything imported or exported for business has to be declared, however small the quantity or value.

Only a short list of goods needs a separate permit or certificate:

• weapons and explosives
• narcotic and psychotropic substances
• antiques and works of art
• poisons
• medicines
• plants, animals and their parts
• high-frequency radio-electronic devices
• radioactive materials
• waste
• specially controlled medicines

Selling some of these goods, such as medicines, also requires a license or permit for the activity itself, under the rules on business licensing in Georgia.

Free Trade Agreements With the EU, China, the CIS and More

Georgia has free trade agreements with the European Union, the CIS countries, Turkey, China, the four EFTA states, Hong Kong, the United Kingdom and the UAE. The EU deal is the Deep and Comprehensive Free Trade Area (DCFTA), part of the Association Agreement. Trade with CIS countries runs on bilateral agreements, since Georgia left the CIS in 2009.

Few countries the size of Georgia enjoy preferential access to both the EU and Chinese markets. Goods made or substantially processed in Georgia cross these borders at zero or reduced duty.

To get the lower rate, you have to prove Georgian origin with a certificate issued before the goods ship: EUR.1 for the EU under the DCFTA, CT-1 for CIS destinations, or the China FTA certificate. It is issued by the Revenue Service or the Chamber of Commerce on the basis of invoices and production records.

Under the revised Pan-Euro-Mediterranean rules of origin, which now govern EU trade, EUR.1 certificates are valid for 10 months from issue, while CT-1 and China certificates last 12 months. The certificate is presented to customs in the destination country, not in Georgia.

Companies that export regularly can apply for approved exporter status. Instead of getting a certificate for each shipment, they then declare origin directly on the commercial invoice.

Free Industrial Zones: Manufacturing for Export With Almost No Tax

Georgia has free industrial zones in Tbilisi, Kutaisi and Poti, each with its own customs regime. Goods produced inside a zone fall under the country's regular customs rules only when they leave it for the rest of Georgia.

A company manufacturing for export inside a zone pays no profit tax, property tax or customs duty, and no VAT on imported raw materials. Staff still owe the 20% personal income tax, which they declare themselves. Funded pension contributions of 2% from the employer and 2% from the employee apply just as they do elsewhere in Georgia.

Different rules kick in when zone goods are sold on the Georgian domestic market. They are subject to VAT, and the zone company also pays an extra 4% of the sale value.

How Customs Clearance Works

Standard clearance takes 1-3 business days, and simple shipments can clear the same day. The declaration is filed through the company's account on rs.ge and processed at the relevant customs checkpoint.

For complex or high-value shipments, companies usually hire a customs broker. The law doesn't require one for a simple declaration, but a wrong commodity code or a paperwork error costs more than the broker's fee, so most businesses use one, at least at first.