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Georgia is among one of the top mining countries in the world. It doesn’t have any legislative restrictions for crypto exchange and doesn’t require license for this activity. Georgian government is selling energy half a price compared to Europe and US. 10% percent of its energy output goes into the currency endeavor. It has created tax-free zones to attract foreign investors. In March 2020 well-known Internet portal 99bitcoins.com included Georgia in the top 10 bitcoin-friendly countries.
This business is very popular in Georgia. Totally 100 000 people are busy with cryptocurrency mining in throughout the country.
Georgia does not have regulatory restrictions on cryptocurrency trading in Georgia and doesn’t have a special legislation. So both miners and traders exchanges can be managed without a hassle when registered in Georgia.
Georgia imposes only 15% corporate tax on worldwide-distributed income and Re-invested profits are tax-free if there isn’t a dividend distribution throughout a year.
Cheap utility made Georgia third biggest Bitcoin mining hub after China and Venezuela.
No Vat payable on crypto arbitrage.
First the documents should be prepared and needs lawyers help, then register a company on National Agency of Public Registry (needs 1 working day) , then opening a corporate bank account, find a physical warehouse solution for mining operations. No limitations apply for foreign shareholders and no minimum capital contribution is required.
According to Georgian Ministry of Finance if a person becomes a resident of Georgia, he/she will not be taxed on the profit generated from selling cryptocurrency, neither VAT will be applicable on such transaction. If a legal entity in Georgia does the same activity, no VAT is payable in that case as well but CIT of 15% and withholding tax 5% will be due only in case of distribution dividends to shareholders.
Selling hash power is considered as a provision of electronic service and is not taxable by VAT if a Georgian resident sells it to a nonresident. However, that transaction is subject to reverse VAT in Georgia if a Georgian resident purchases hash power from abroad. In addition, 10% of withholding tax might apply on the later transaction which might be prevented via application of relevant tax treaty signed by the Georgian government.
The biggest foreign Bitcoin data center – BitFury has invested 30 million USD in Tbilisi free zone to create a data center here.
Many people begin to establish mining farms in Tbilisi, Kutaisi, Poti free industrial zones and in high mountain regions of the country, where the cost of electricity is low.
Cryptocurrency mining in the world is becoming very popular and Georgia creates a favorable condition for attracting foreign investors who want to develop in this area.
Key attractions of Georgian jurisdiction for cryptocurrency market participants:
Cheap electricity – about from 9-11 cents per 1 kW and free in mountainous areas of the country.
Affordable banking– one can open a personal account in a Georgian bank and receive a payment card of the international system as part of package services for 50 GEL per year (about 15 USD). In addition, Georgian banks have premium packages that provide users with many advantages, one of which is free cash withdrawal from ATMs around the world
Lack of currency regulation – Georgian banks do not set restrictions on operations with foreign currency. All transactions done quickly, even at an international scale.
Highest business confidentiality – Georgia is not a participant in the automatic exchange of CRS information, which means that no one will know about the financial turnover that takes place in local banks.
Fast registration of a business – without any obstacles foreigners as well can register a company in one business day.
Loyal taxation – If a foreigner registers a company in the Free Industrial Zone of Georgia and receives revenue only from foreign counterparties, the tax burden will decrease to nil.
A special tax regime – “Small Business” (annual turnover of up to 500,000 GEL) has been specially developed for private entrepreneurs. With this status an entrepreneur pays only 1% of revenue per year.
Loyal migration policy– foreigners from more than 90 countries can visit Georgia and stay in the country 365 days a year without a visa.
All of the above makes it very profitable to register a crypto exchange in Georgia.
Although the National Bank of Georgia does not consider bitcoin and other cryptocurrencies legal payment instruments, yet it does not control operations with virtual money. The loyalty of the Georgian authorities to crypto is also evidenced by the fact that on June 28, 2019, the Ministry of Finance of Georgia even provided an explanation of the taxation of cryptocurrency market participants.
The main points of the normative document are as follows:
The last paragraph requires mining companies that are registered in Georgia to pay VAT (18%), which leads to added costs and detriments the attractiveness of the jurisdiction. However, all other conditions increase the attractiveness of the sale and crypto exchange and of course, we should not forget about the Free Industrial Zones, where legal entities, including mining companies, are exempted from paying VAT on export earnings.
Selling currency by legal entities (unlike natural person, if he is resident of Georgia) is subject to taxation (15% corporate income tax). If the entity decides to distribute the profit (dividend) to shareholders, it pays 5% (withholding tax) above 15% (CIT) of corporate tax. However, if it will be reinvested, then they don’t pay anything.
The minimum amount to start bitcoin trading is 10 USD
From 2017 a telemarketing system for cryptocurrency exchange started to operate in Georgia. Its web address is coinmania.ge. Bitcoin, Litecoin, Ethereum, and other digital currencies are bought and sold there.
Popular exchanges to buy bitcoin and crypto in Georgia:
Coinmania
Bitstamp
Paxful
OkCoin
Changelly
It’s noteworthy that Bitcoin ATMs exist in Tbilisi in many locations.
Conclusion
Georgia’s eagerness for cryptocurrency mining has surprised many nations and more people are ready to come on board with cryptocurrency, due to its favorable conditions in Georgia. Georgia doesn’t have any legislative restrictions for crypto exchange and doesn’t require license for this activity. Georgian government is selling energy half a price compared to Europe and US. Georgian government is selling energy half a price compared to Europe and US. Cheap utility made Georgia third biggest Bitcoin mining hub after China and Venezuela. . If a legal entity in Georgia does the same activity, no VAT is payable in that case as well but CIT of 15% and withholding tax 5% will be due only in case of distribution dividends to shareholders. Selling hash power is considered as a provision of electronic service and is not taxable by VAT if a Georgian resident sells it to a nonresident. However, that transaction is subject to reverse VAT in Georgia if a Georgian resident purchases hash power from abroad.
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