Georgia Economic Outlook 2016 Government of Georgia www.gov.ge
Table of Contents Georgian Economy Business Environment and Ratings Tax Environment Key Terms of The Tender Lottery Sector in Georgia Contact Information Government of Georgia www.gov.ge
Government of Georgia www.gov.ge
Georgian Economy Georgia – Country Overview Population 3.7 mln Government Economic Policy: GDP Per Capita (PPP) USD 9,630 (2015) Private Sector Driven Growth GDP real growth rate: 2.8% (2015) Equal opportunities in Private sector Growth oriented Government Investments GDP CAGR 2010 – 2015: 4.9% Open Competition in the business sector (GEL) Free trade policy FDI USD 1.56 bln (2015*) USD 834 mln (2016 6M*) External Trade: USD 9.9 bln. (2015*) Unemployment rate 12.0% (2015) Inflation rate 2015: 4% Georgia has diversified GDP structure which is well-positioned for sustainable growth. Due to the devaluation of GEL to USD, the total GDP pointed in USD shows a drop in 2015 but actually GDP real growth rate in 2015 was 2.8%. The GDP compound annual growth rate of last 5 years from 2010 to 2015 reached 4.9 % and Georgia is widely expected to maintain steady growth for the years to come. Source: www.geostat.ge *-preliminary data Government of Georgia www.gov.ge
Georgian Economy Country at Glance Resilient Above 5% average growth during the last 10 years Economic Around 5% projected average growth over the next years Growth History Deep and Comprehensive Free Trade Agreement (DCFTA) with EU was singed on June 27, 2014 Strong Free Trade Agreement with European Free trade Association (EFTA) since International 2016 Ties Visa Liberalization with the EU Ongoing reforms under AA agenda Favorable “Globally, Georgia improved the most in the areas measured by Doing Business Business over the past 12 years” – DB 2016 Environment Tangible improvement in Corruption Perception Index over the 10 years – up by 82 places since 2005 (Transparency International) Strong Improved governance and rule of law WGI’s score “Regulatory Quality” improved from 35.7 (2004) to 79.3 (2014) Governance Record WGI’s score “Rule of Law” improved from 31.1 (2004) to 64.4 (2014) Government of Georgia www.gov.ge
Georgian Economy Fast-Growing Diversified Economy GDP 12,000 8 7.2 7 6.2 10,000 4.9% CAGR from 2010 6.4 5.0 6 5.0 8,000 5 Around 5% average growth rate 4.6 6,000 4 3.4 3.0 3 expected over the next years 4,000 2.8 2 2,000 GDP per capita has doubled during 1 6,568 7,287 8,002 8,527 9,198 9,630 10,015 10,634 11,397 0 0 last decade 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F GDP per capita PPP, Current international dollar Real GDP growth, y-o-y, % Source: Geostat, IMF Components of GDP 2015 GDP Growth Forecasts 5.3% Other, 5.2% 5.0% 9.7% Industry, 4.5% Key Growth 16.5% 3.4% Drivers: 3.0% ( Average growth since Trade, 2009 ) 16.6% Manufacturing Services, 8.7% 38.7% IMF WorldBank Construction Public administrat 7.4% Agricultur 2016 2017 2018 ion, 9.3% e, 9.2% Services 6.9% Government of Georgia Source: Geostat www.gov.ge
Government of Georgia www.gov.ge
Business Environment and Ratings Attractive Investment Destination Growing FDI Stock 2500 25.0% 19.8% 2000 20.0% 15.3% 1500 15.0% 12.2% 11.2% 10.7% mln. USD 7.7% 1000 10.0% 7.0% 7.0% 6.1% 5.8% 5.8% 500 5.0% 450 1190 2015 1564 658 814 1117 912 942 1758 1564 0 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 FDI Share in GDP Source: Geostat Political stability FDI by Sector, 2015 (%) Business-friendly environment Corruption-free public service Other sectors, 7% Increase of market size by FTAs Mining, 6% Low crime-rate Real Estate, 6% BITs with 32 countries Member of ICSID Convention since 1992 Transports and Free capital repatriation Construction, 7% communications Competitive cost of labor 37% - Available young and skilled labor force - Flexible labor legislation Energy sector, 8% Improved access to finance: - Strong banking sector Hotels and restaurants, 9% - 2 large investment funds Financial sector, Health and social 11% work, 9% Government of Georgia www.gov.ge
Business Environment and Ratings Business Environment in Numbers Registering Property Starting Business New Zealand New Zealand Country’s impressive 1 1 progress in Canada 3 Lithuania 2 improving business Georgia Georgia 6 3 climate has been Singapore 10 Denmark 9 well documented in Russia 41 United States 34 a number of United States 49 Poland 41 international indices Turkey 94 Turkey 52 Germany 107 France 85 Rule of Law Index Index of Economic Freedom Denmark 1 Singapore 1 Liberal and free Singapore 9 The Netherlands 16 market oriented United Kingdom 12 Germany 17 economic policy United States 19 Georgia 23 strengthened by Georgia 29 Sweden 26 the rule of law Bulgaria 45 Armenia 54 Russia France 75 75 Turkey 80 Russia 153 Percentage of users paying a Percentage of users paying Georgia is bribe to tax authorities in the last a bribe in registry and permit considered as an essentially year services in the last year corruption-free investment Georgia 0% Hungary 1% destination 1% 2% Norway 1% Denmark 2% 1% 2% Hungary 1% South Korea 2% 2% 2% Switzerland 2% Switzerland 5% 11% 4% Ukraine 22% Ukraine 18% Government of Georgia Source: World Bank; The World Justice Project; The Heritage Foundation; Transparency International, Global Corruption Barometer 2013 www.gov.ge
Government of Georgia www.gov.ge
Tax Environment Growth Friendly Tax Environment Taxes Only 6 flat taxes today 18% VAT No payroll tax or social contribution Streamlined Tax Administration Territorial principle of taxation for 20% Personal Income Tax individuals Robust e-filing and e-payment systems DTA with 52 countries Electronic VAT Invoices Corporate Income Tax (taxable More opportunities offered by special Advance Ruling 15% only on distribution) zones: Free Industrial Zones, Free Accelerated Services Tourism Zones Dividend & Interest 5% Income Tax World Economic Forum issued The Global Competitiveness report for 138 countries, please see extract for Georgia’s positioning from the report below: • Total tax rate % profits – 9 th • Effect of taxation on incentives to work – 10 th • Effect of taxation on incentives to invest – 11 th • No. of procedures to start a business – 3 rd • Trade tariffs % duty – 4 th • Time to start a business days – 5 th • Prevalence of non-tariff barriers – 14 th • Burden of customs procedures – 12 th Government of Georgia Source: World Bank/IFC, Doing Business 2016 www.gov.ge
Government of Georgia www.gov.ge
Lottery Sector in Georgia Lottery Privatization A one-time payment, minimum payments with bank guarantees, and percentage tax on lottery should Commercial be taken into consideration holistically in developing the financial terms of privatization between the Terms of government and the operator. Privatization These elements and associated figures are result of reasonable assumptions and research of leading practices. The government reasonably considers a one-time payment of $5 million USD based on the One-time Georgian lottery’s historical performance, industry soundings, jurisdictional scans and an estimated payment/mandatory range from financial analysis on these inputs. When candidates bid to participate in the tender guarantee process, they must provide the bank guarantee of $5 million USD to the Georgian government. A minimum annual payment of $2.8 million USD to the government during 10 years period with Minimum payments bank guarantees under a revenue share model is reasonable given the estimated range based on with bank guarantees projected revenues from historical lottery sales. Operator must provide bank guarantee on $2.8 million annually during the entire operation period. A 8% lottery tax on tickets sold from the service operator to the government on a quarterly basis is Percentage of tax on reasonable for the Georgian context. Though a ‘revenue share’ model is more common in the lottery value of lottery industry, if the Georgian government decides to maintain a lottery tax, this tax will replace any tickets sold revenue share structure. Note: The concept of Lottery Tax has been considered for all of the models and approaches. The Lottery Tax is simply a function of the government’s revenue share and one -time payment they decide to allocate toward Lottery Tax. Government of Georgia www.gov.ge
Recommend
More recommend
