Презентация Гиорги Пертая на GEORGIA GAMING CONGRESS 2015

Investment Climate &Gambling Business Opportunities in Georgia

Georgian National Investment Agency(GNIA)

2015

Area: 69,700 sq km

Population: 4.5 mln

Life expectancy: 75 years

Official language: Georgian

Literacy: 100%

Capital: Tbilisi

Currency (code): Lari (GEL)

Georgia - Country Overview

GDP 2014 (est): USD 16.9 bln

GDP real growth rate 2014 (est): 4.7%

GDP CAGR 09 -14 (USD) (est): 5.6%

GDP per capita 2014(est): US$ 3763

Inflation rate 2014 : 3.1%

Total Public Debt to Nominal GDP (%) 2014 (est): 34.6%

www.investingeorgia.org 2

Advantages of Investment Climate in Georgia


A politically stable investment destination Efficient, pro-business and corruption-free government Enlargement of market size by Free Trade Agreements Competitive cost of labor and energy Entry gate in the region Solid sovereign balance sheet Stable banking sector Very low crime-rate

BB- Stable BB- Positive Ba3 Positive

Singapore

United States

United Kingdom

GEORGIA

Latvia

Netherlands

Bulgaria

Armenia

Turkey

Russia

Azerbaijan

China

Ukraine

1

7

8

15

23

27

38

45

55

62

80

90

96

Doing Business in Georgia

Ease of Doing Business Index Of Economic Freedom

Source: World Bank, DB 2015 (Rank out of 189 countries)

Hong KongUnited States

United KingdomGermanyGEORGIA

SwedenArmenia

KazakhstanTurkeyFrance

AzerbaijanChina

RussiaUkraine

1121316

2223

52697073

85139143

162

Source: The Heritage Foundation, 2015 (Rank out of 178 countries)

Up from 112 in 2005 Up from 99 in 2005

Country's impressive progress in improving business climate has been well documented in a number of international indices.


Hungary

GEORGIA

Denmark

Norway

Korea (South)

Canada

Switzerland

UK

United States

Armenia

Turkey

Ukraine

1%

2%

2%

2%

2%

2%

5%

11%

14%

16%

20%

22%

GEORGIA

Global Corruption Barometer

Source: Transparency International 2013 (GLOBAL CORRUPTION BAROMETER)

Georgia is considered as essentially a corruption-free investment destination


Corruption Free Country

GEORGIA

Denmark

Norway

Korea (South)

Hungary

Canada

Switzerland

UK

United States

Armenia

Turkey

Ukraine

0%

1%

1%

1%

1%

2%

2%

4%

9%

9%

15%

18%

GEORGIAPercentage of users paying a bribe to tax authorities in the past year

Percentage of users paying a bribe in registry and permit services

Favorable public debt situation

Economic Structure and Trends

Broad-based and diversified nominal GDP structure in 2013

Rapidly growing GDP per capitaGDP: Strong rebound after a relatively small contraction in 2009

Source: Geostat, MOF Source: Geostat, MOF

Source: Geostat, MOFSource: Geostat, MOF


Agriculture, forestry and fishing9%

Industry17%

Construction7%

Trade17%

Hotels and restaurants2%

Transport and Communica-tion11%

Financial intermediation3%

Public administration10%

Education5%

Health and social work6%

Other sectors12%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130%

10%

20%

30%

40%

50%

60%

70% 63.2%

50.5%

40.0%

32.0%25.5%

31.2%

41.0% 42.4%36.5% 34.9% 34.7%44.9%

34.5%26.8%

21.1%16.8%

23.5%

31.7% 33.6%28.8% 27.6% 27.2%

Total Public Debt to Nominal GDP (%)External Public Debt to Nominal GDP (%)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E

02468

1012141618

-8.0%

-3.0%

2.0%

7.0%

12.0%

5.16.4

7.810.2

12.810.8 11

14.415.8 16.1 16.9

5.9%9.6% 9.4%

12.3%

2.3%

-3.8% 6.3%7.2% 6.2%

3.2% 4.7%

Nominal GDP (US$bln) Real GDP growth, y-o-y (%)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E

0500

1000150020002500300035004000

11881484

17642315

29212455 2623

32313523 3600 3763

Liberal Trade Regimes

Preferential Trade Regimes:• FTA with CIS countries and Turkey • DCFTA (Deep and Comprehensive

Free Trade Agreement ) with EU was singed on June 27, 2014

• GSP agreement with USA, Norway, Switzerland, Canada, Japan

• Member of WTO

• Very simple and service oriented customs policy and administration – customs clearance in 15 minutes

• ~80% of goods free from import tariffs• No quantitative restrictions

Duty free access to ~0.9 billion marketprovided by FTAs and DCFTA


Before Current Change year

Number of Taxes 21 6 2005-2007

VAT 20% 18% 2005

Personal Income Tax

12-20% 20%

2004 - 2009

Social Tax 33% -

Corporate Profit Tax 20% 15% 2008

Customs/import Tax 0%, 5% or 12%

Excise Tax Depends on goods

Property Tax Up to 1%

No payroll tax or social insurance tax

No capital gains tax

No wealth tax and inheritance tax

Personal income tax for interest, dividend, royalty – 5%

Foreign-source income of individuals fully exempted

Accelerated depreciation on capital assets

Loss carry forward for corporate profit tax purposes (10 years)

No restrictions on currency convertibility or repatriation of capital & profit

Double taxation avoidance treaties with 47 countries

Taxation - simple, low, efficient and fair


According to the latest Tax Misery & Reform Index, released by Forbes Business & Financial News, Georgia is the fourth least tax burden country after Qatar, UAE and Hong Kong

Leader in Forbes rating (Tax Misery & Reform Index)


Georgia is expecting significant growth trajectory in tourist arrivals

Number of international visitors has been growing rapidly

2005 2006 2007 2008 2009 2010 2011 2012 2013

0.61 1.1 1.3 1.5

2.0

2.8

4.4

Source: Georgian National Tourism Administration

+38%

+56%

+22% 5.4


Hospitality - Fast Growing Sector

Fast growing sector• Tourism contributed 6.5% of GDP in 2013.• Number of visitors increased by 38% reaching 2.8 million in 2011 and by 56% in 2012 reaching 4.4 million.

Georgia had 22% more visitors in 2013 reaching 5.4 million. Number of international arrivals reached 4 657 525 mln during the first 10 months of 2014. (2% increase compared to the same period of the last year).

• Majority of tourists come from: Turkey (30%), Armenia (23%), Azerbaijan (19%), Russia (14%), Ukraine (2%). • Tourist number of international visitors from Europe increased by 3 % in 2014 • Average duration of stay - 5 nights, average spend - USD 650

Potential• European Youth Olympic Festival 2015; UEFA Super Cup 2015.• UNESCO heritage sites; 8 national parks • Curative climate; mineral waters;• According the IUCN criteria there are 84 different categories of Protected Areas(Total area – 520 811 ha; 7,47% of

the country’s territory)


Source-Georgian National Tourism Administration

More international luxury hotel chains are coming to the market…

Existing Hotel Chains (8 pipeline hotel projects in Tbilisi)

With the growth of tourists the demand for hotel rooms has been growing in the last years in Georgia, which has stimulated investments in the hotel sector.

Average occupancy rate of international brand hotels in Tbilisi Reached to 80% in 2013 , Tbilisi hotel market is expected growth this year of an estimated 83%;

Supply of the rooms increased, but still there is a huge capacity for development of Hotel Industry.

Upcoming international hotel brands in Georgia

Batumi

Tbilisi

Batumi

TbilisiBatumi

Tbilisi


Tbilisi/Likani

Source: TBSC Consulting

Investment opportunities in Hospitality & Real Estate

Expansion of summer ”sun and beach” franchise focusing on high-end segment

All inclusive summer resorts

New master resort development

Description

Potential location

Batumi Anaklia Kobuleti Other Black Sea

locations

Mestia Gudauri Bakuriani Goderdzi

Master development of winter resorts with unique profile equivalent to the Alps

Government is fully committed to provision of basic infrastructure

Four season resort value preposition

Majestic landscapesallow for a wide range of tourism activities such as camping, climbing, rafting, fishing, hunting etc.

Development of Spa Resorts

Include hotels, different types of clinics, fitness, outdoor activities

4

Tskhaltubo Akhtala Other locations

3

“Sun-beach” resorts

Winter ski resorts

Summer mountains resorts

SpaResorts

Development of large-scale integrated casino complex to Serve regional markets.

Include hotels, casino entertainment, family Services and shopping

Fiscal incentives available

Batumi Tbilisi Other locations

Gambling

5


2

Mestia Gudauri Bakuriani Goderdzi Kazbegi Other locations

1

Map of Regional Countries Fully of Partially Banning Gambling Activities

14

• Legislation in surrounding countries prevents people from enjoying gambling facilities, but Georgia will provide them with high quality gambling experience similar to world class gambling destination as Las Vegas or Monte Carlo

• Countries where gambling is completely or partially prohibited: Russia, Turkey, Azerbaijan, Iran, Israel, Kazakhstan, Saudi Arabia etc.

• Easy access by Land, Sea and Air makes Georgia attractive gambling destination for all above countries and beyond.

• Gambling business is fully decriminalized.

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Gambling Business in Georgia

• There are couple of choices for starting Gambling Business in Georgia: Casino Slot Machines Table Games Bookmaker Bingo Lotto Promotional Drawing Game

• Georgia Revenue Service (Tax and Customs Administration of Georgia) is responsible for issuing permits, regulation and supervision of gambling business

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Casino Fees

Annual fees:• 5 000 000 GEL (with exceptions)

• These exceptions vary according to the location of the company: Batumi, Kobuleti, Borjomi, Bazaleti Lake, Gurjaani district, vill. Katchreti – 250 000 GEL

Akhaltsikhe – 100 000 GEL

Some of the regions are totally exempt from annual state fees: Gudauri, Khazbegi, Bakuriani, Sighnagi and Tskaltubo – are totally exempt from annual fees with no

conditions

Batumi, Kobuleti, Khelvachauri, Anaklia and Ganmukhuri are exempt from an annual fee on a condition

that the casino will operate in newly opened 100 or 80 room hotel

Quarterly fees:• For each Casino Table - 15 000 - 30 000 GEL (Tournaments tables are not subject to quarterly fees )

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Exempt from annual fee + 100 Room HotelExempt from annual fee + 80 Room HotelExempt from annual fee with no conditions250000 GEL annual fee100000 GEL annual fee

17

Casino Fee Payment Map


Other Gainful Games Fees

18

Slot MachinesAnnual State Fees: 50 000 – 1 000 000 GEL (Tbilisi – 1 000 000 GEL)In case of locating slot machine club within Casino in Tbilisi: 100 000 GELQuarterly Fees: For each Slot Machine: 1500 – 3000 GEL

Table GamesAnnual state fees:Only Casino permit and gaming machine permit holders are allowed to open table gaming clubCasino Permit holders are allowed to open 3 Gaming Clubs in any part of Georgia for freeGaming Machine Permit holders are allowed to open 1 Gaming Club in any part of Georgia for freeEach following Gaming Club: 10 000 – 50 000 GEL Quarterly fees: For each Table in Table Game: 3 000 – 10 000 GEL

BookmakerAnnual state fees: 30 000 - 300 000 GELQuarterly fees: Free

Bingo/LottoAnnual state fees: 15 000 GEL Quarterly fees: Free

Promotional Drawing GameAnnual fees: 15 000 GELQuarterly fees: 10% of Prize Fund


Land Based Gambling and Gainful Games Taxing

• Casino Personal income tax (salaries) – 20%; Property tax – up to 1%; Corporate Income Tax– 15%; W/H - only during

tournament – 20%;

• Slot Machines Personal income tax (salaries)– 20%; Property tax – up to 1%;

• Table Games Personal income tax (salaries)– 20%; withholding liability- only during tournament – 20%; Property tax – up to 1%;

• Bookmaker Personal income tax (salaries) – 20%; Property tax – up to 1%;

• Bingo/Lotto Personal income tax (salaries)– 20%; Corporate Income Tax– 15%; withholding liability – 20%; Property tax – up to

1%;

• Promotional Drawing Game Personal income tax (salaries) – 20%; Corporate Income Tax– 15%; withholding liability – 20%; Property tax – up to

1%;

iGaming Permits

• iGaming permit is only issued to the land-based permit holders (of Georgia).

• Gambling and gainful games may be arranged by internet for: Casino Slot machines Bookmaker Promotional Drawing Game

• A company in Georgia is prohibited from providing iGaming services to an offshore company

• iGaming permit holders pay quarterly fees. Quarterly fees are determined by Local Administrations, which vary from 30000 to 60000 GEL


iGaming Taxation

• Casino

Personal income tax (salaries)– 20%, Corporate Income Tax – 15%, property tax – up to 1%,

withholding liability– only during tournament -20%

• Slot Machines

Personal income tax (salaries) – 20%, Corporate Income Tax – 15%, Property tax – up to 1%.

• Bookmakers 5% of the turnover (gross revenue). Personal income tax (salaries) –20%; property tax–up to 1%.

• Promotional Drawing Game personal income tax (salaries)– 20%; property tax – up to 1%, Corporate Income Tax– 15%; withholding liability - 20%


GEORGIAN NATIONAL INVESTMENT AGENCY

• STATE AGENCY

– Promoting Georgia internationally

– Supporting foreign investments and investors

before, during & after investment process

• “One-stop-shop” for investors

• Moderator between Investors,

Government and Local Companies

LocalCompanies

Investors

Government

GNIA

Mission - Attracting Greenfield and M&A Investments


WHAT YOU CAN GET FROM GNIA


• INFORMATION - General data, statistics, sector researches

• COMMUNICATION - Access to Government at all levels/Local partners

• Organization of site visits & Accompanying investors

• AFTER CARE - Legal advising & Supporting services

24

GEORGIAN NATIONAL INVESTMENT AGENCY

7 Bambis Rigi, Business Center Mantashevi,

II floor 0105, Tbilisi, Georgia

Tel: (+995 32) 2 473 696

E-mail: [email protected]


mailto:[email protected]?subject=Invest%20in%20Georgia%20Enquiry%20

mailto:[email protected]?subject=Invest%20in%20Georgia%20Enquiry%20

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