What is Georgia FIZ and why do crypto companies want to get a license there?

Georgia offers two main types of local crypto licenses: the mainland license and the Georgia FIZ license, where FIZ stands for Free Industrial Zone. These are special economic zones that offer regulatory and tax advantages to attract foreign investment and promote specific industries, including technology and cryptocurrency. Naturally, registering a crypto company in Georgia FIZ can bring multiple advantages, including a simplified market entry and multiple tax incentives

What does FIZ stand for in the context of Georgia?

Anyone applying for a Georgia FIZ crypto license can take advantage of operating in a so-called Free Industrial Zone. These zones have their own taxation regime, designed to attract startups and young businesses into the country. Georgia FIZ is a perfect option for new companies that are just stepping foot in the Asian blockchain market. Despite the simplified licensing process, companies registered in Georgia FIZ have the full right to operate and conduct activities with this one license

What is the primary purpose of establishing Free Industrial Zones (FIZs) in Georgia?

Free Industrial Zones are special economic areas established with multiple goals. Mainly, to stimulate foreign direct investment (FDI), create a business-friendly environment with reduced regulation and taxes for startups and young entrepreneurs, develop export-oriented industries, and encourage the growth of young and innovative sectors, such as crypto and associated blockchain activities.

Are crypto companies required to have a physical presence within a Georgia FIZ to obtain a license?

Yes, physical presence is among the few requirements necessary for obtaining the Georgia FIZ crypto license. Crypto companies must generally register and maintain a legal presence (such as an office address or representative office) within the specific FIZ to qualify for a license and benefit from the incentives. Once the company is formed, it is safe to proceed to the licensing application

What are some of the key tax benefits offered to companies operating within a Georgia FIZ?

Tax incentives are the main reason why Georgia FIZ is so attractive to young entrepreneurs in the blockchain sector. The corporate income tax for companies operating from Georgia FIZ is at 0%. There are also no VAT taxes, property taxes, or import/export taxes imposed. The dividend tax is 15%, but can be reduced to 0% if the dividends are distributed among non-residents

Which regulatory body in Georgia is typically responsible for issuing crypto licenses within a FIZ?

At the moment, there is no national crypto-specific licensing regime yet established in Georgia. Within Free Industrial Zones, the zone administrator (private or semi-governmental) typically issues business permits or licenses, while the National Bank of Georgia (NBG) oversees AML compliance and may regulate FinTech or crypto-financial services if the activity overlaps with financial services.

What types of crypto-related activities are generally permitted under a Georgia FIZ license?

The Georgia FIZ crypto license allows for pretty much the same range of blockchain activities as the mainland crypto authorisation. The permitted activities include:

• Crypto exchange operations;
• Custodial wallet services;
• Crypto mining and hosting;
• Tokenisation platforms;
• Blockchain development and consulting services;
• Crypto payment gateway services.

A crypto company in Georgia FIZ is allowed to perform these activities as long as it does not offer its services to Georgian residents, which may invoke new and stricter compliance regulations

How does the speed of obtaining a crypto license in a Georgia FIZ compare to other jurisdictions?

Another advantage of opening and registering your blockchain company in Georgia FIZ is the speed of the authorisation process. Normally, the entire procedure can be completed in up to a month, often less: 5-7 working days are required for LLC company formation in Georgia and an additional 1-2 weeks for the licensing application submission and reviewing processes. You can speed up this procedure if you entrust the company authorisation to a reputable legal partner. Such a timeline is considerably shorter compared to the mainland Georgia license and other worldwide frameworks

Are there specific Anti-Money Laundering (AML) or Know Your Customer (KYC) requirements for crypto companies licensed in a Georgia FIZ?

Yes, but these compliance requirements are lightly enforced compared, for instance, to the EU. Georgia FIZ companies must:

• Comply with basic AML/KYC requirements under Georgia’s AML law if they engage in finance-related activities;
• In separate cases, register with the Financial Monitoring Service of Georgia;
• Implement internal procedures when providing services to or dealing with foreign clients.

However, many FIZs do not enforce stringent AML checks unless dealing with fiat or traditional financial services.

Does a crypto license obtained in a Georgia FIZ have any geographical limitations on its operational scope?

Yes, and this is the main disadvantage of registering within a Georgian FIZ. Local crypto companies cannot extend their services to mainland Georgia, as well as the EU and the rest of the world. In fact, the Georgia FIZ license is best suited for businesses that serve foreign or offshore markets, with operations conducted virtually or exported from Georgia.

Besides tax advantages, what other factors make Georgia FIZ attractive for crypto companies seeking licensing?

Apart from the tax incentives, Georgia FIZ licensing is beneficial due to a fast (3-4 weeks) and light registration process with minimal compliance requirements. The biggest obstacle that can stand in the way is company formation and AML/CFT compliance, but these are easily tackled with the help of a certified legal team by your side. In most cases, there are no initial capital requirements, and the general business environment is liberating and friendly to young entrepreneurs. Overall, if you seek quick market entrance with a minimal bureaucratic burden, Georgia FIZ can be the answer you are looking for