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[Music] welcome back everyone michael here with offshore citizen and we are talking today about the subject of georgia and doing business in georgia so i've got some other videos on there it's an interesting place to visit we can have a whole lengthy conversation about that but the thing that I'm really going to talk about today is why Georgia has really become a not good place to do business anymore which is really really unfortunate and you know I'll kind of dive into what's going on behind that but to give you some background we banked in Georgia for many years okay many many years probably I don't know maybe 2014 if something like that was when we first started getting set up there we liked their banking quite a bit TVC and Bank of Georgia both good easy to work with banks back then you were able to open bank accounts for offshore companies which is fantastic no the problem was you know it's difficult to get there but that great online banking the customer service is fantastic you know we really really appreciated working with those banks okay unfortunately what ended up happening was they stopped accepting offshore companies more or less the only way you could do it was through wealth management account so there's kind of limits on on that but that was fine because at first there was an ability to operate with companies in Georgia and we would first do that through there's free trade zone companies which were zero tax they were quite expensive to set up and maintain but hey you know that was potentially worth it and a lot of people set up there that wasn't something that I was particularly no super fond of but they also got something called virtual trade zone companies and that was very interesting and they also modified their tax rules in order to be quite competitive like Georgia has a very interesting tax system there's a bunch to love about what is Georgia has set up for a number of reasons so they have similar tax system to Estonia in terms of how they tax distributions versus profits and things like this they had possibilities of getting much lower taxes which was fantastic and they were not on black lists that was also good so we would look at you know example people based in Portugal could operate through Georgia very very interesting it wasn't on blacklist etc and there's a variety of things like this okay so that was quite quite nice unfortunately what ended up happening was Georgia because they were one of the few countries that didn't sign on to CR as the common reporting standard and yet still had good banking sort of became a hotbed for the wrong types of people and this is something that I would say in general is worth noting okay in general if countries are too easy to get set up with they really think are the types of places that it's great for money launderers and criminals then that's a bad thing for you you don't want to be there because over the long term you're running a legitimate business you're I don't know selling on Amazon selling you know doing your drop shipping business doing affiliate marketing and providing some sort of IT services whatever it is that you're doing this is an actual legit you're not a criminal right well the problem is when ID attracts a whole bunch of criminals in you're gonna get it's kind of the bad apple spoils the bunch concept right this is really really not good it's create any we've seen it it happened in Cyprus right there was it happens in Montenegro again Latvia you know now Georgia right and a number of other places as well there's something I've got in Andorra with banca privada you know so on and so forth right there's just there's been a bunch of cases where this has happened and it's really not not particularly useful not wonderful for us right so what is the climate today well unfortunately over the last maybe a year maybe a little bit less than a year there has been a situation where they more or less made it impossible for foreigners to do real business even if they're operating through Jordan company before so first what happened quite a while ago was free zone companies basically had an impossibility of getting bank accounts it was just very very difficult right and in fact those free zone companies mostly weren't accepted anywhere right they weren't accepted I mean extreme was they were not being accepted in Macedonia in a bunch of cases in Macedonia it's a super easy place to get banking but it turns out not so much so that was that was an issue now again I wasn't such a big person on the free zone companies it was like okay better off to pay a little bit of tax but have this nice stability but you know then what ended up happening was according to what I'm told by some of the bankers etc was they started to get visits from various members of authorities of other places but basically you know show them a badge or something and say hey look do you realize you have clients in such-and-such and that really spooked them and caused things to to close off they became much more risk-averse so that today in my experience if you're not a Georgian president you're gonna have a very difficult time opening up a bank account for a company unless yet maybe if you have George and Resident Director you may be short on that but generally speaking if you were just a foreigner who owns a Georgian company good luck opening account now it used to be the first change that happened was they said okay you have to offer operations in Georgia sit say okay great we're gonna say I don't mind helping an operation there I don't mind setting up an office hiring some people wages are low office space is cheap no problems happy to do that but then you got to this point where I was like well hang on a minute you know even if that is the case and you're not a Georgian resident you don't have georgian resident director we're gonna cause you problems and so that ripple effect was really not good really really not good it was very problematic in terms of kind of you know being able to get banking so the truth is you can still get bank accounts for georgian companies potentially elsewhere right you can say okay great i'm gonna get a comfortable Gary I'm gonna get a bull bank account and Poland gonna get a my accountant Latvia or straight with you ain't yeah something like this that's it maybe I can go transfer wise account what if these things are still possibilities okay but it's mostly been eroded and one of the things that was so nice about but I would say there was primarily three really nice things about doing business in Georgia one was it was they have done a great job of eliminating bureaucracy so it was a very easy system you could form a company quickly and fairly easily that was very nice it was a bit of a pain that you either had to go there or send a power of attorney and you know translations and I was a little bit of a pain but that being said not not the end of the world the second thing that was great was their tax system was good it was not necessarily zero tax or not necessarily that low but you could have a fair degree of tax efficiency and the third thing that went along with that was you a great baking so this combination was wonderful and one of the more recent examples I saw was somebody who and they said okay great we'll open the account for you because you have an office you know employees but we're only going to allow you to do domestic George from transfers you'd only transfer money to people inside Georgia well for people doing online business international business how much your business comes from Georgia you know how many like you know how many of your suppliers you're paying in Georgia you're not in Georgia you know so that really was a non-starter and ultimately you know a bit of a mess so the bottom line is that generally for people at this point in time when they started talking about banking in Georgia and having Georgian companies etc unless you're prepared to invest fairly heavily put them pretty you know increase your expenses quite a lot have George and directors maybe become georgian resident yourself etc and even then you know you could have you could have issues with transfers and it was being sent to and i'll you know just much more hassle than you were gonna have before and unless you're willing to go through all that today in which case you know is does it really make sense maybe you should just be in UAE or something maybe you should be in Hong Kong maybe you know a bunch of these places unless you wanted to go through that realistically it's probably not gonna make a ton of sense to operate in Georgia which doesn't say it's really unfortunate because I do like I do like a lot about their system I would love if it was a little bit better and you know the way that it was but that's just not the reality today unfortunately banking in general has gotten fairly complex so that's the situation again if you have a Georgian company and you're struggling with bank it's that or reach out to us you know we'll see what we can do to help you if there's some reason why you need to go there and set things up or maybe there's some unique situation where it still makes sense for you to spend you know an extra I don't know at this point in time probably cost you an extra ten thousand dollars a year or something to maintain a company there if that's the case you know you're gonna have a local resident director or think this maybe you're gonna invest you to become a resident perfect okay if that's the case let us know and we're happy to help you and otherwise if you're looking for alternatives to Georgia you're saying okay well I can't be in Georgia where can I be I'm talking to people with that these days right where is the new places to set up reach out to us and and I'm happy to help you discuss it with you so you can look for us on after citizen net offer capitalist com we got lots of other videos and articles and things like this you can check out subscribe to this channel like this video hopefully it was useful and some in the comments that you've got some topic you'd like to see us discuss let us know and I will see you guys on the next video