Free Economic Zones (FEZ) offer an attractive platform for investors by offering tax benefits, simplified customs procedures, a business-friendly environment and favorable conditions for economic activities. Several free industrial zones (FIZ) operate in Georgia, including Tbilisi, Kutaisi and Poti Free Industrial Zones.

The history of FIZs in Georgia spans approximately 15 years, with the first decade marked by slow development. This was due to various macro and micro challenges, ranging from a lack of awareness and investor skepticism to legislation that was not well-suited to investment interests and mismanagement of the FIZ model by administrators.

However, in recent years, improvements in regulations, accumulated management experience, and increased awareness have helped FIZs establish themselves as key drivers of foreign direct investment and economic growth. Hundreds of companies registered in FIZs actively contribute to industrial and trade turnover while creating employment opportunities in Georgia.

It is important to note that FIZs operate  in a highly competitive environment both regionally and locally. Alongside competition from Turkey and South Caucasus countries, free zones in the UAE offer attractive business conditions, making the market even more challenging. Additionally, national governments play a significant role in shaping the competitiveness of these zones within their respective jurisdictions.

This article explores the unique advantages of Georgia’s FIZs and explains why they stand out as attractive investment destinations compared to the country’s broader investment landscape.

Advantages

Strategic Location FIZs in Georgia are situated in strategically important locations, particularly the one in the capital city, Tbilisi, which provides direct access to key services, including the labor market.  This facilitates smooth interactions with business partners and government institutions—an essential factor for investors. Additionally, the logistical positioning of FIZs is convenient, with access to ports (such as Poti Free Zone), railway terminals, airports (such as Hualing Kutaisi Free Zone), and other critical infrastructure.

Favorable Tax Environment: Companies operating within FIZs benefit from a 100% exemption from all corporate taxes. Dividend withdrawals can be made anytime in cash or via bank transfer. This is a significant benefit, as companies can achieve substantial savings, especially in the initial stages of operations, with zero import tax on goods and machinery and no profit or dividend taxes, resulting in an approximate 20% margin advantage.

Developed Infrastructure: Free industrial zones, especially Tbilisi FIZ, provide modern infrastructure with ready-to-use buildings and integrated utilities. This reduces the administrative and financial burden on companies, saving time and capital cost that would otherwise be spent on setting up operations.

Easy Entry & Exit: FIZ operates on a lease-only model, which simplifies market entry and exit. With flexible conditions and well-developed infrastructure, businesses face minimal financial risks, making it easier and faster to start operations.

Business Support: Investors in Free industrial zones have strong support from zone administrators. Unlike companies operating outside these zones, which must handle administrative and operational matters independently, businesses within FIZ benefit from direct assistance from zone operators, streamlining their operations.

However, despite these advantages, companies seeking long-term capital investments and access to local financial resources may find it more strategically beneficial to operate outside of free zones. This allows them to acquire real estate and leverage local financial institutions for funding.

Conclusion

FIZ offers an efficient and cost-effective business environment, particularly for trade and small to medium-sized manufacturing enterprises that require low capital investment and rapid operational readiness. The benefits offered by Free Industrial Zones make them an attractive choice for investors looking for an efficient and profitable platform to start or expand their business in Georgia.