Doing Business 2019 Georgia Economy Profile Georgia Page 1 Doing Business 2019 Georgia Economy Profile of Georgia Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Georgia About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Georgia Ease of Doing Business in Region Europe & Central Asia DB 2019 Rank 190 1 Georgia Income Category Lower middle income 6 DB 2019 Ease of doing business score Population 3,717,100 0 100 City Covered Tbilisi 83.28 DB 2019 Ease of Doing Business Score 0 100 83.28: Georgia (Rank: 6) 78.64: Azerbaijan (Rank: 25) 75.77: Belarus (Rank: 37) 75.37: Armenia (Rank: 41) 72.34: Regional Average (Europe & Central Asia) 71.24: Bulgaria (Rank: 59) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Georgia 2 4 2 1 12 8 16 27 28 39 43 55 60 82 Rank 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Georgia 99.34 100 92.86 89.03 90.03 84.38 85.00 81.67 80 77.61 76.90 Score 60 56.03 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Georgia Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a also collected for the second largest business city. business or to leave the home to register the - The entire office space is approximately 929 square meters (10,000 square feet). company - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 - Does not qualify for investment incentives or any special benefits. procedures cannot start on the same day) - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final The owners: document is received - Have reached the legal age of majority. If there is no legal age of majority, they are • No prior contact with officials assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Georgia Starting a Business - Georgia Standardized Company Legal form Limited Liability Company Paid-in minimum capital requirement GEL 0 City Covered Tbilisi Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Procedure – Men (number) 1 5.2 4.9 1 (New Zealand) Time – Men (days) 2 12.9 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 2.2 4.6 3.1 0.0 (Slovenia) Procedure – Women (number) 1 5.2 4.9 1 (New Zealand) Time – Women (days) 2 12.9 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 2.2 4.6 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 2.3 8.6 0.0 (117 Economies) Figure – Starting a Business in Georgia and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 99.34: Georgia (Rank: 2) 96.21: Armenia (Rank: 8) 96.14: Azerbaijan (Rank: 9) 93.39: Belarus (Rank: 29) 90.02: Regional Average (Europe & Central Asia) 85.38: Bulgaria (Rank: 99) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Georgia Figure – Starting a Business in Georgia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 2 2.5 Cost (% of income per capita) 2 1.5 Time (days) 1.5 1 1 0.5 0.5 0 0 1 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Georgia Details – Starting a Business in Georgia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs Page 8 Doing Business 2019 Georgia 1 Pay registration fee, register the company with the Entrepreneurial 2 days GEL 100 (regular Register, obtain an identification number and certificate of state and tax registration) or GEL registration, and register for VAT 200 (expedited Agency : NAPR registration) + GEL 1 The following documents need to be submitted for LLC registration: (bank charges) + (a) Certified Application for Registration; (b) Certified Memorandum of Association; GEL 5 for certification (c) Certified consent of the owner of premises to use the address as legal per document address. Payment of the registration fee can be done at the same place where the documents are submitted. Alternatively, founders can provide the document evidencing the payment of the registration fees. The application must be signed by all founding partners of the company. The information contained in the application may be included in the charter of the company or partners' agreement (in this case no separate application shall be required). The application, charter/partners agreement, and consent of the owner of premises need to be executed before a public notary or at the registry (in that case, a certification fee applies). In addition, though not specifically required by law, in accordance with the registration instruction, the applicant must submit a document confirming lawful occupation of the premises to be used as a legal address of the company (lease agreement) and the written consent of the appointed director (manager) to serve on this position. A signature sample may also be accepted instead of the said consent. Submission of application for registration may be carried out by one of the founding partners of the Company (in which case the documents must be preliminary certified by notary), the appointed director or by a person appointed by the partner (or partners) by virtue of a duly issued and certified power of attorney. In such cases as well, all documents to be submitted to the registration agency must be preliminary certified by notary. According to the amendment on registration of a company NAPR requires companies to provide e-mail and alternative address, which differs from company's legal address, in order to simplify formal contact with the company (e.g.: for Revenue Service, administrative agencies, Courts, creditors, etc.). This regulation is mandatory upon initial registration of a company, as well as for registration of changes in constituent documents. Georgian legislation provides for a possibility to open a bank account while registering the company at NAPR. According to Article 157 of the Tax Code of Georgia, “A person/entity, which carries out an economic activity and the total amount of VAT taxable transactions carried out in any continuous period up to 12 calendar months exceeds GEL 100 000”, shall apply for a VAT registration to Revenue Service under Ministry of Finance of Georgia. A company can also perform voluntary registration. Starting from February 27, 2018, together with the application with the request to register the company, company representative with the same application is able to request the voluntary registration of the company as a VAT taxpayer without visiting the Revenue Service territorial service center. Updated form of registration application to be filled out at the NAPR contains section where the company may indicate that it wishes to be registered as a VAT payer voluntarily immediately upon registration of the company. In such case, NAPR electronically delivers to the Revenue Service the application to register company as a VAT taxpayer. Together with the completion of business registration procedure, the company is registered as a VAT taxpayer. The company representative receives the notification on voluntary registering as an VAT taxpayer through mobile phone message, according to the contact information provided in the application. While completing company registration proceedings, the National Agency of Public Registry (NAPR) sends to the Revenue Service request (application) on registration of company as a VAT payer. Company registration by the NAPR should be completed in one business day (when applying for regular proceedings). Revenue Service makes decision on registration of company as VAT payer immediately after the receipt of respective application from the NAPR. In any case, company will be considered as VAT payer from the moment of transfer by the NAPR to the Revenue Service of request on registration of company as VAT payer. This means that if company files registration application with NAPR on Monday (applying for regular proceedings) and selects to be registered as VAT payer as part of its incorporation application, registration of the company by the NAPR as well as VAT registration by the Revenue Service is typically completed on Tuesday. If the Revenue Service receives respective request from the NAPR after working hours, registration of company as VAT payer may be completed on Wednesday at the latest. Takes place simultaneously with previous procedure. Page 9 Doing Business 2019 Georgia Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its topographical experts. completion - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering - Will be used for general storage activities, such as storage of books or stationery. information - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted as procedures. Cost required to complete each procedure (% of - Will take 30 weeks to construct (excluding all delays due to administrative and income per capita) regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be • Quality control before construction (0-1) installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 10 Doing Business 2019 Georgia Dealing with Construction Permits - Georgia Standardized Warehouse Estimated value of warehouse GEL 484,517.60 City Covered Tbilisi Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 11 16.0 12.7 None in 2017/18 Time (days) 63 170.1 153.1 None in 2017/18 Cost (% of warehouse value) 0.3 4.0 1.5 None in 2017/18 Building quality control index (0-15) 7.0 12.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Georgia and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 77.61: Georgia (Rank: 27) 75.46: Bulgaria (Rank: 37) 74.69: Belarus (Rank: 46) 73.11: Azerbaijan (Rank: 61) 69.02: Regional Average (Europe & Central Asia) 68.06: Armenia (Rank: 98) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Georgia – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.16 60 0.14 Cost (% of warehouse value) 50 0.12 40 Time (days) 0.1 0.08 30 0.06 20 0.04 10 0.02 0 0 1 *2 3 4 5 6 7 8 9 10 11 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2019 Georgia Figure – Dealing with Construction Permits in Georgia and comparator economies – Measure of Quality 15 14.0 13.0 12.0 12.0 Index score 10 9.0 7.0 5 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Details – Dealing with Construction Permits in Georgia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain topographic study of the land plot 4 days GEL 700 Agency : Private licensed company A topographic study of the land plot is obtained by BuildCo prior to developing the architectural plans of the warehouse. 2 Obtain technical conditions for water and sewage 3 days no charge Agency : Georgian Water and Power BuildCo obtains technical conditions for water and sewage connection in order to design the project. Technical conditions are not requested at the time of requesting a building permit, but they are an essential component of the project design phase. 3 Request and obtain terms of construction from Tbilisi Architecture at the 5 days no charge Tbilisi Hall Agency : Tbilisi Architecture at the Tbilisi Hall The applicant requests terms of construction from the Tbilisi City Hall, which acts as preliminary permission to build on the land plot and to design the project. Within 5 days of when the application is submitted Tbilisi Hall provides general instructions of what type of building the applicant may construct, how much of the land the project may occupy on the land plot, and how the landscape is to be utilized. This information is needed in order to complete the architectural design of the project. 4 Request and obtain design approval from Tbilisi Architecture at the Tbilisi 15 days no charge Hall Agency : Tbilisi Architecture at the Tbilisi Hall Once the architectural design is complete, based on the terms of construction provided, the applicant submits a request for approval to the Tbilisi Architecture at Tbilisi Hall. City Hall then has 15 days to grant its approval. When this approval is obtained, BuildCo may submit all the documents to obtain a building permit. 5 Request and obtain building permit from Tbilisi Architecture 10 days GEL 650 Agency : Tbilisi Architecture The cost is determined by the project value. According to Tbilisi Government Resolution No 2-21, as of February 28, 2008, the fee has been increased to GEL 1.00 per sq. m. and only the ground floor space is counted. Thus, the breakdown in the case considered here is 1300.6/2 x GEL 1.00 = GEL 650.30. According to GOG Resolution No. 57 as of March 24 2009, construction projects are classified into risk-based categories. Depending on the complexity of each category, different types of procedures are to be followed by applicants. The first category is the lowest risk, and the fifth is the most complex one. The Doing Business case study warehouse falls under category III, which does not require project expertise and entails a simplified process of approval that also excludes the need for approval of Architectural-Construction Design. 6 Receive an inspection during construction from the Tbilisi Supervisory 1 day no charge Service Agency Agency : Tbilisi Supervisory Service Agency The Tbilisi Supervisory Service Agency will conduct inspections twice a year or at its discretion to check whether there are any deviation from the approved project. 7 Notify Tbilisi Supervisory Agency of the completion of construction works 1 day no charge Agency : Tbilisi Supervisory Service Agency When construction works are complete, BuildCo notifies Tbilisi Supervisory Service Agency that the site is ready for a final inspection. 8 Receive final inspection from the Tbilisi Supervisory Service Agency 1 day no charge Agency : Tbilisi Supervisory Service Agency The Tbilisi Supervisory Service Agency will conduct a final inspection after the completion of construction. Page 12 Doing Business 2019 Georgia 9 Request and receive connection to water and sewage service 10 days no charge Agency : Georgian Water and Power Having obtained the conditions from the water authority, BuildCo starts building the water and sewage pipes to the main water pipeline. Once there is a connection to the main pipeline, the inspector from private water company (Georgian Water and Power) comes to confirm the connection and sign the protocol. 10 Request and obtain exploitation of building construction from Tbilisi 15 days no charge Supervisory Service Agency Agency : Tbilisi Supervisory Service Agency After the completion of construction and prior to registration at the Public Registry, BuildCo submits a request to the Department of Supervision of Tbilisi for a decision on completion/occupancy permission. The list of documents required for the submission are approved by the Resolution of Government of Georgia № 57 on March 24, 2009 "On the Procedures and Conditions of Issuance of Construction Permits", Article 96, Paragraph 3. 11 Register the building with the National Public Registry 1 day GEL 150 Agency : National Public Registry The company must submit the document obtained in the previous procedure and the exploitation permit. The time line is faster under the Georgian Law on Registration of Rights on Immovable Property (December 28, 2005). Takes place simultaneously with previous procedure. Page 13 Doing Business 2019 Georgia Details – Dealing with Construction Permits in Georgia – Measure of Quality Answer Score Building quality control index (0-15) 7.0 Quality of building regulations index (0-2) 1.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 0.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer; Unscheduled inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency; Yes, in- house engineer submits report for final inspection. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 0.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Owner or 0.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 0.0 What are the qualification requirements for the professional responsible for verifying that the There are no 0.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) specific requirements. What are the qualification requirements for the professional who supervises the construction There are no 0.0 on the ground? (0-2) specific requirements. Page 14 Doing Business 2019 Georgia Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and - Has two stories with a total surface area of approximately 1,300.6 square meters obtaining final supply (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property Cost required to complete each procedure (% of because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy • Tools to monitor power outages (0–1) consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 15 Doing Business 2019 Georgia Getting Electricity - Georgia Standardized Connection Price of electricity (US cents per kWh) 6.5 Name of utility Telasi JSC City Covered Tbilisi Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 3 5.3 4.5 3 (25 Economies) Time (days) 71 110.3 77.2 18 (3 Economies) Cost (% of income per capita) 157.4 325.1 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 5 5.5 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Georgia and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 90.79: Armenia (Rank: 17) 90.24: Belarus (Rank: 20) 84.38: Georgia (Rank: 39) 77.27: Azerbaijan (Rank: 74) 71.66: Regional Average (Europe & Central Asia) 54.93: Bulgaria (Rank: 147) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 16 Doing Business 2019 Georgia Figure – Getting Electricity in Georgia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 70 90 80 Cost (% of income per capita) 60 70 50 60 Time (days) 40 50 40 30 30 20 20 10 10 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Georgia and comparator economies – Measure of Quality 8 8 7 7 7 6 6 5.5 Index score 5 5 4 3 2 1 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Page 17 Doing Business 2019 Georgia Details – Getting Electricity in Georgia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Telasi and await site inspection 5 calendar days GEL 7,627 Agency : Telasi The application for an electricity connection can be submitted online or in person. It includes the applicant's bank account details in order for the Utility company to pay the 50% fine if the prescribed time is not met. The applicant also submits a document certifying property rights or lending rights for the space/buildings where applicant’s electrical installation is located is attached to the application; and a receipt of payment of the 50% of the connection fee. Five days after the application has been submitted, Telasi visits the premises during which the preliminary specifications of the connection are discussed. 2 Receive site inspection by Telasi and await technical conditions 11 calendar days GEL 0 Agency : Telasi After the application is submitted, Telasi carries out an external review of the site in order to prepare the technical conditions. Someone from the applicant’s party is required to be present during the site inspection. After the inspection, the 50% of the connection fee has to be paid if it has been suggested that the connection is to be 380/220 V. Following the inspection, the technical conditions related to the external connection - and a project design which outlines in detail specifications of the connection - are issued. The connection contract is also signed. The Technical conditions generally include instructions for construction of a new substation; lining of high-voltage and low-voltage cables; in a case of reconstruction works - participation of the customer in the required works. 3 Await completion of external works, meter installation and electricity 55 calendar days GEL 7,627 supply by Telasi Agency : Telasi After the technical conditions are issued and the remaining 50% of the connection fee has been paid, the external connection works can be completed by Telasi. Before Telasi can start the works, they need to receive a number of permits: from water agency (Водоканал), telephone agency, Mayor’s office and other institutions depending on the whether the connection passes any roads, etc. Takes place simultaneously with previous procedure. Page 18 Doing Business 2019 Georgia Details – Getting Electricity in Georgia – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 5 Total duration and frequency of outages per customer a year (0-3) 1 System average interruption duration index (SAIDI) 5.8 System average interruption frequency index (SAIFI) 4.8 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.telasi.ge/e n/customers/tariffs Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 19 Doing Business 2019 Georgia Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past 10 years. • Each procedure starts on a separate day - - Is registered in the land registry or cadastre, or both, and is free of title disputes. though procedures that can be fully completed online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, any kind. duties and taxes). - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 20 Doing Business 2019 Georgia Registering Property - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Procedures (number) 1 5.3 4.7 1 (4 Economies) Time (days) 1 20.3 20.1 1 (New Zealand) Cost (% of property value) 0.0 2.6 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 21.5 19.6 23.0 None in 2017/18 Figure – Registering Property in Georgia and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 92.86: Georgia (Rank: 4) 92.19: Belarus (Rank: 5) 86.97: Armenia (Rank: 14) 84.63: Azerbaijan (Rank: 17) 75.57: Regional Average (Europe & Central Asia) 69.32: Bulgaria (Rank: 67) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Georgia – Procedure, Time and Cost Time (days) Cost (% of property value) 1 0.035 0.03 Cost (% of property value) 0.8 0.025 Time (days) 0.6 0.02 0.015 0.4 0.01 0.2 0.005 0 0 1 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 21 Doing Business 2019 Georgia Figure – Registering Property in Georgia and comparator economies – Measure of Quality 30 25 23.5 21.5 20.5 Index score 19.0 19.6 20 17.5 15 10 5 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Details – Registering Property in Georgia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs Page 22 Doing Business 2019 Georgia 1 Register the purchaser’s title with the district Public Registry 1 day GEL 169.49; Agency : National Agency of Public Registry (Expedited The sale purchase agreement is not required to be notarized, as of the amended procedure: Super fast Civil Code of March 2007, clause 183. The extract can be obtained by following procedure (1 ways: calendar day) - GEL a) online, b) visit to the Registry and get it there, or c) in case of registering property via authorized entities (banks, notaries or real estate companies) extract 200 (including VAT can be received on the spot. (18%)); 1 business day (1-2 The new online registry of property was launched in 2007-2008. Online business calendar days)- 150 registry was launched in 2010. Above-mentioned registers are unified under the GEL (including VAT Georgian National Agency of Public Registry - NAPR (www.napr.gov.ge), which (18%)); is widely used. Registration fees may be paid at any commercial bank in Regular procedure (4 Georgia. If registration is completed at the NAPR, the payment can be done with business days) is 50 the bank representative, who is always presented at every NAPR office. Registration can be also conducted by an authorized user (all banks), notaries, GEL (including VAT real estate companies). In this case, registration fee is applied on the spot. (18%)). Online payment of registration fee is also possible, when the application is filed online. There is also an All properties in Tbilisi have been systematically transferred into the electronic option available to database. All the system operations are fully computerized, including Old Bureau apply for an extract of Technical Inventory files that have been scanned. The NAPR may conduct electronically via the registration process and issue an Ownership Certificate (extract) on the same Georgian National day of submission of documents, in 1 business day and in 4 business days Agency of Public (ordinary registration procedure). Registry (NAPR) The documentation shall include: website with fees (1) Sale and Purchase agreement being as follows: 1 (2) Identification documents of the authorized presentative of the parties and if working day - 10 GEL they are not directors of the relevant limited liability companies - their respective (including VAT (18%) POAs or other documents on the basis of which these individuals are granted and at the day of authority to act on behalf of the parties. application - 40 GEL (3) Receipt confirming payment of Public Registry registration fee. (including VAT It is also possible to submit the transaction at one of the 500 authorized users. (18%).) These can be banks, notaries or real estate companies. These entities can verify the transaction and submit the purchase and sale agreement to the National Agency of Public Registry. The employees dealing with these transactions received a training provided by the National Agency of Public Registry and a memorandum is signed between the National Agency of Public Registry and the entity. The most commonly used authorized users are banks. The authorized entity receiving the application will verify the identity of the buyer and seller, or authorized party, as well as the ownership of the property. Once the information is submitted though a specific software, the National Agency of Public Registry employee will verify again the ownership and the existence of the individuals (in the Civil registry database that they can access electronically) and process the transfer. Another software is used at this stage. Georgian legislation provides for the possibility of accelerated proceedings, therefore if the buyer wishes to register property transfer on the same day of submission of all necessary documents, the fee is respectively GEL 200. If registration is carried out on the day following the day of submission, the fee totals to GEL 150. GEL 50 is a fee paid for ordinary registration procedures, which take 4 business days following the submission of all required documents to the Public Registry. The payment is done at any commercial bank. There is also an option available to apply for an extract electronically via the Georgian National Agency of Public Registry (NAPR) website with fees being as follows: 1 working day - 10 GEL and at the day of application - 40 GEL. The 2% immovable property transfer tax has been abolished. A new Tax Code specifies “Income Tax” for physical persons and “Profit Tax” for legal entities in case of property sale, only if sale of property takes place within 2 years after its purchase and equals to 20% (for physical persons) and 15% (for legal entities) of the difference between purchase and sale price. These are capital gains taxes. If the sale of property takes place after 2 years since its purchase, physical persons are exempted from paying "Income Tax". Takes place simultaneously with previous procedure. Page 23 Doing Business 2019 Georgia Details – Registering Property in Georgia – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? National Agency of Public Registry under Ministry of Justice of Georgia In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: National Agency of Public Registry under Ministry of Justice of Georgia In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 4.5 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://napr.gov.ge /c/30 Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://napr.gov.ge /p/455 Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://napr.gov.ge /c/30 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 74774.0 Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Page 24 Doing Business 2019 Georgia Link for online access: http://napr.gov.ge /p/455 Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://napr.gov.ge /c/30 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 2.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 7.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property Tbilisi City Court worth 50 times gross national income (GNI) per capita and located in the largest business city, what court would be in charge of the case in the first instance? How long does it take on average to obtain a decision from the first-instance court for such a Between 1 and 2 2.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: 1175 in 2017 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 25 Doing Business 2019 Georgia Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 26 Doing Business 2019 Georgia Getting Credit - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Strength of legal rights index (0-12) 9 7.2 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 6.6 6.7 8 (42 Economies) Credit registry coverage (% of adults) 0 25.3 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 100 43.4 65.3 100.0 (25 Economies) Figure – Getting Credit in Georgia and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 85.00: Georgia (Rank: 12) 80.00: Azerbaijan (Rank: 22) 70.00: Armenia (Rank: 44) 68.70: Regional Average (Europe & Central Asia) 65.00: Bulgaria (Rank: 60) 55.00: Belarus (Rank: 85) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Georgia and comparator economies 9 8 8 8 7.2 7 6 6 Index Score 5 4 4 3 2 1 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Page 27 Doing Business 2019 Georgia Details – Legal Rights in Georgia Strength of legal rights index (0-12) 9 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without Yes requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be Yes secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed Yes online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Georgia and comparator economies 8 8 8 8 7 7 6.6 6 Index Score 5 5 4 3 2 1 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Page 28 Doing Business 2019 Georgia Details – Credit Information in Georgia Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 2,497,011 0 Number of firms 68,847 0 Total 2,565,858 0 Percentage of adult population 100 0 Page 29 Doing Business 2019 Georgia Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand • Extent of ownership and control index (0-10): Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price Governance safeguards protecting shareholders is equal to 10% of Buyer’s assets and is higher than the market value. from undue board control and entrenchment - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 30 Doing Business 2019 Georgia Protecting Minority Investors - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Extent of disclosure index (0-10) 9.0 7.3 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 4.9 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 9.0 6.8 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 7.0 7.1 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 9.0 5.6 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 7.5 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Georgia and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 81.67: Azerbaijan (Rank: 2) 81.67: Georgia (Rank: 2) 68.33: Bulgaria (Rank: 33) 65.29: Regional Average (Europe & Central Asia) 63.33: Armenia (Rank: 51) 63.33: Belarus (Rank: 51) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Georgia and comparator economies – Measure of Quality Georgia 9 6 9 9 7 9 Armenia 8 6 6 3 7 8 Azerbaijan 10 5 10 7 9 8 Belarus 8 2 7 7 6 8 Bulgaria 9 2 10 4 8 8 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Europe & Central Asia 7.6 4.6 7.2 5.6 7.3 6.8 0 10 20 30 40 50 60 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 31 Doing Business 2019 Georgia Details – Protecting Minority Investors in Georgia – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 8 Extent of disclosure index (0-10) 9.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 9.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the Yes 1.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying Yes 1.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 8.3 Extent of shareholder rights index (0-10) 7.0 Does the sale of 51% of Buyer's assets require shareholder approval? Yes 1.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new No 0.0 shares? Page 32 Doing Business 2019 Georgia Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require Yes 1.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to No 0.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 9.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of Yes 1.0 directors? Must the board of directors include independent and nonexecutive board members? Yes 1.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 33 Doing Business 2019 Georgia Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and mandatory contributions are measured at all levels of government. • Collecting information, computing tax payable • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be Total tax and contribution rate (% of commercial fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. • Dividend, capital gains, financial transactions discovered the error and voluntarily notified the tax authority. The value of the taxes underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 34 Doing Business 2019 Georgia Paying Taxes - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Payments (number per year) 5 16.6 11.2 3 (Hong Kong SAR, China) Time (hours per year) 220 214.8 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 9.9 32.3 39.8 26.1% (32 Economies) Postfiling index (0-100) 85.89 64.41 84.41 None in 2017/18 Figure – Paying Taxes in Georgia and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 89.03: Georgia (Rank: 16) 85.23: Azerbaijan (Rank: 28) 75.80: Regional Average (Europe & Central Asia) 74.46: Armenia (Rank: 82) 72.00: Bulgaria (Rank: 92) 70.68: Belarus (Rank: 99) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Georgia and comparator economies – Measure of Quality 100 85.89 83.79 80 71.02 64.41 Index score 60 49.08 50.00 40 20 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Page 35 Doing Business 2019 Georgia Details – Paying Taxes in Georgia Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Corporate 1.0 online 55.0 15% distributed 7.77 income tax profit Property tax 1.0 online 1% all fixed 2.08 assets minus land Land tax 1.0 online GEL 0.24 per land area 0.04 sq. meter of nonagricultur al land Personal 1.0 online 56.0 20% 0.00 withheld income tax Value added 1.0 online 109.0 18% value added 0.00 not included tax (VAT) Totals 5 220 9.9 Page 36 Doing Business 2019 Georgia Details – Paying Taxes in Georgia – Tax by Type Taxes by type Answer Profit tax (% of profit) 7.8 Labor tax and contributions (% of profit) 0 Other taxes (% of profit) 2.1 Page 37 Doing Business 2019 Georgia Details – Paying Taxes in Georgia – Measure of Quality Answer Score Postfiling index (0-100) 85.89 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 50% - 74% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 21.5 57 Time to obtain a VAT refund (weeks) 10.2 86.55 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.0 100 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 38 Doing Business 2019 Georgia Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is the largest purchaser of this product. • Transport between warehouse and port/border Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 39 Doing Business 2019 Georgia Trading across Borders - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Time to export: Border compliance (hours) 6 22.1 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 112 157.5 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 2 24.3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 0 97.9 35.2 0 (20 Economies) Time to import: Border compliance (hours) 15 21.1 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 396 162.3 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 2 24.7 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 189 93.9 24.9 0 (30 Economies) Figure – Trading across Borders in Georgia and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 97.41: Bulgaria (Rank: 21) 96.21: Belarus (Rank: 25) 90.03: Georgia (Rank: 43) 89.22: Armenia (Rank: 46) 86.17: Regional Average (Europe & Central Asia) 77.04: Azerbaijan (Rank: 84) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Georgia – Time and Cost Time (hours) Cost (USD) 16 15 450 396 14 400 350 Time (hours) 12 Cost (USD) 300 10 250 8 189 6 200 6 112 150 4 100 2 2 2 50 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 40 Doing Business 2019 Georgia Details – Trading across Borders in Georgia Characteristics Export Import Product HS 72 : Iron and steel HS 8708: Parts and accessories of motor vehicles Trade partner Turkey Germany Border Sarpi border crossing Poti port Distance (km) 390 334 Domestic transport time (hours) 10 7 Domestic transport cost (USD) 550 464 Details – Trading across Borders in Georgia – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 1.0 100.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 5.0 12.0 Import: Clearance and inspections required 5.8 150.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 15.0 246.4 Page 41 Doing Business 2019 Georgia Details – Trading across Borders in Georgia – Trade Documents Export Import Commercial invoice Commercial invoice Customs Export Declaration Bill of lading CMR waybill CMR waybill Certificate of origin Customs Import Declaration SOLAS certificate Page 42 Doing Business 2019 Georgia Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The seller enforces the judgment through a public sale of the buyer’s movable • Alternative dispute resolution (0-3) assets. Page 43 Doing Business 2019 Georgia Enforcing Contracts - Georgia Standardized Case Claim value GEL 17,259 Court name Tbilisi Civil Court City Covered Tbilisi Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Time (days) 285 496.3 582.4 None in 2017/18 Cost (% of claim value) 25.0 26.3 21.2 None in 2017/18 Quality of judicial processes index (0-18) 13.0 10.3 11.5 None in 2017/18 Figure – Enforcing Contracts in Georgia and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 76.90: Georgia (Rank: 8) 70.63: Armenia (Rank: 24) 69.44: Belarus (Rank: 29) 67.51: Azerbaijan (Rank: 40) 67.04: Bulgaria (Rank: 42) 65.65: Regional Average (Europe & Central Asia) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Georgia – Time and Cost Time (days) Cost (% of claim value) 700 30 Cost (% of claim value) 26.3 570 564 25.0 582.4 600 23.4 25 496.3 21.2 Time (days) 500 18.5 18.6 20 400 16.0 285 15 300 277 275 10 200 100 5 0 0 Armenia Azerbaijan Belarus Bulgaria Europe Georgia OECD & high Central income Asia Page 44 Doing Business 2019 Georgia Figure – Enforcing Contracts in Georgia and comparator economies – Measure of Quality Georgia 2.5 4.5 2.5 3.5 Armenia 3 3.5 2 3.5 Azerbaijan 0 2 1.5 3 Belarus 2.5 2.5 1 2.5 Bulgaria 2.5 2.5 2 3.5 OECD high income 2.5 3.1 2.3 3.6 Europe & Central Asia 2.1 3 1.4 3.6 0 2 4 6 8 10 12 14 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Georgia Indicator Time (days) 285 Filing and service 35 Trial and judgment 100 Enforcement of judgment 150 Cost (% of claim value) 25.0 Attorney fees 18 Court fees 5 Enforcement fees 2 Quality of judicial processes index (0-18) 13.0 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 4.5 Court automation (0-4) 2.5 Alternative dispute resolution (0-3) 2.5 Page 45 Doing Business 2019 Georgia Details – Enforcing Contracts in Georgia – Measure of Quality Answer Score Quality of judicial processes index (0-18) 13.0 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.5 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? Yes 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 2.5 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.5 4.a Are judgments rendered in commercial cases at all levels made available to the No general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 Page 46 Doing Business 2019 Georgia 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or No consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 47 Doing Business 2019 Georgia Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 48 Doing Business 2019 Georgia Resolving Insolvency - Georgia Indicator Georgia Europe & OECD high Best Regulatory Central Asia income Performance Recovery rate (cents on the dollar) 40.2 38.6 70.5 None in 2017/18 Time (years) 2.0 2.3 1.7 0.4 (Ireland) Cost (% of estate) 10.0 13.2 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going 0 .. .. .. concern) Strength of insolvency framework index (0-16) 11.0 11.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Georgia and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 63.79: Azerbaijan (Rank: 45) 57.52: Bulgaria (Rank: 56) 56.03: Georgia (Rank: 60) 55.58: Regional Average (Europe & Central Asia) 52.58: Belarus (Rank: 72) 43.99: Armenia (Rank: 95) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Georgia – Time and Cost Time (years) Cost (% of estate) 3.5 17.0 3.3 18 16 Cost (% of estate) 3 13.2 14 Time (years) 2.5 12.0 2.3 11.0 12 1.9 2.0 10.0 2 9.0 1.7 9.3 10 1.5 1.5 1.5 8 6 1 4 0.5 2 0 0 Armenia Azerbaijan Belarus Bulgaria Europe Georgia OECD & high Central income Asia Page 49 Doing Business 2019 Georgia Figure – Resolving Insolvency in Georgia and comparator economies – Measure of Quality Georgia 5.5 2.5 3 0 Armenia 2 2.5 1 2 Azerbaijan 6 3 3 1.5 Belarus 5.5 2 2 0.5 Bulgaria 3 2.5 4 2.5 OECD high income 5.3 2.8 2.2 1.9 Europe & Central Asia 4.5 2.6 2.3 1.8 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Georgia and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 80 60 40.2 38.2 40.1 39.6 37.2 38.6 40 20 0 Georgia Armenia Azerbaijan Belarus Bulgaria Europe & Central Asia Page 50 Doing Business 2019 Georgia Details – Resolving Insolvency in Georgia Indicator Answer Score Proceeding liquidation BizBank is most likely to initiate liquidation proceedings, because it would want to sell the assets as soon as possible. As a secured creditor, BizBank can prevent the use of reorganization procedure. It also holds 74% of the debt, which would allow it to select a representative to the Conciliation Council - a body that decides whether liquidation or reorganization should be pursued. Outcome piecemeal sale The hotel's assets will be sold at a public auction. At the first auction, the assets must be sold as a whole. If they are not sold at the first auction, the creditors may authorize a piecemeal sale during the second auction and the price will be decreased (Article 38 of the Law on Insolvency Proceedings). It is likely to be difficult to find a buyer for the hotel as a going concern, therefore, the most likely outcome is a piecemeal sale. Time (in years) 2.0 According to the Law on Insolvency Proceedings, it should take not more than 225 days to complete liquidation proceedings. However, in practice it takes 2 years to complete the process, because statutory deadlines are not always complied with. In particular, it may take a year to convene the first meeting of creditors. As a fist step, BizBank will commence insolvency proceedings with the Tbilisi City Court. The court will review the materials and accept the case for consideration. Once the case is accepted, the National Enforcement Bureau will be appointed as a trustee/supervisor (Article 26 of the Law on Insolvency Proceedings) and the date for the first meeting of the creditors is set (Article 21 of the Law on Insolvency Proceedings). The trustee will inform the creditors about the opening of the insolvency proceedings by publication.Trustee will assume control over the management of the debtor company, examine its financials and prepare a report on the insolvency of debtor (Article 26 of the Law on Insolvency Proceedings). Creditors submit their claims, and then present them at the first meeting of the creditors. The judge makes a decision whether to accept or reject each claim, which in practice may take significant time (Article 29 of the Law on Insolvency Proceedings). Conciliation Council will be appointed (the debtor and the creditors will each appoint one member and the two will elect the third member) (Article 32 of the Law on Insolvency Proceedings). The Conciliation Councel will decide whether to proceed liquidation or with reorganization (Article 33 of the Law on Insolvency Proceedings). Once the decision to liquidate the debtor is made, the creditors will appoint a liquidation manager (Article 37 of the Law on Insolvency Proceedings). Debtor's assets will be sold at an auction organized by the National Enforcement Bureau. Cost (% of 10.0 The total cost of the proceedings would amount to approximately 10% of the value of the hotel. estate) Around 7% of the value will be paid to the National Bureau of Enforcement for their service as an insolvency trustee and 1% of the value of the estate will be paid to the National Bureau of Enforcement for acting as an auctioneer (Article 9 of the Order No 144 of the Minister of Justice, dated July 30, 2010). Other expenses will include attorneys' fees, which may vary between 1 and 4%. Recovery rate 40.2 (cents on the dollar) Page 51 Doing Business 2019 Georgia Details – Resolving Insolvency in Georgia – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 11.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (a) Debtor is 1.0 insolvency framework? generally unable to pay its debts as they mature Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all 0.5 pre- commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 0.0 Which creditors vote on the proposed reorganization plan? (c) Other 0.0 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information Yes 1.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 52 Doing Business 2019 Georgia Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 53 Doing Business 2019 Georgia Labor Market Regulation - Georgia Details – Labor Market Regulation in Georgia Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 30.0 Maximum length of fixed-term contracts, including renewals (months) 30.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 15.6 Ratio of minimum wage to value added per worker 0.0 Maximum length of probationary period (months) 6.0 Working hours Standard workday 8.0 Maximum number of working days per week 7.0 Premium for night work (% of hourly pay) 0.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 0.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 24.0 Paid annual leave for a worker with 5 years of tenure (working days) 24.0 Paid annual leave for a worker with 10 years of tenure (working days) 24.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 24.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 4.3 Page 54 Doing Business 2019 Georgia Severance pay for redundancy dismissal for a worker with 5 years of tenure 4.3 Severance pay for redundancy dismissal for a worker with 10 years of tenure 4.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? No Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 183.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? n.a. Page 55 Doing Business 2019 Georgia Business Reforms in Georgia In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Starting a Business: Georgia made starting a business easier by allowing voluntary value added tax registration at the time of business incorporation. Paying Taxes: Georgia made paying taxes easier by levying income tax on distributed profits rather than on taxable profits. At the same time, Georgia made paying taxes more difficult by requiring value added tax to be imposed on advance payments for goods and services. Enforcing Contracts: Georgia made enforcing contracts easier by introducing random and automatic assignment of cases to judges throughout the courts. DB2018 Getting Electricity: Georgia made getting electricity more affordable by reducing the connection costs for new customers. Protecting Minority Investors: Georgia strengthened minority investor protections by making it easier to sue directors in cases of prejudicial transactions between interested parties, by increasing shareholder rights and role in major corporate decisions and clarifying ownership and control structures. Resolving Insolvency: Georgia made resolving insolvency easier by making insolvency proceedings more accessible for debtors and creditors, improving provisions on treatment of contracts during insolvency and granting creditors greater participation in important decisions during the proceedings. DB2017 Getting Electricity: Georgia improved the reliability of electricity supply by introducing penalties for the utility for having worse scores on the annual system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI) than the previous year. Georgia also mandated the notification of customers by the utility of planned electricity outages. Registering Property: Georgia improved the quality of land administration by increasing coverage of all maps for privately held land plots in the main business city. Protecting Minority Investors: Georgia strengthened minority investor protections by increasing shareholder rights and role in major corporate decisions and by clarifying ownership and control structures. Paying Taxes: Georgia made paying taxes easier by abolishing additional annex to corporate income tax returns and by improving the efficiency of the online system used for filing VAT returns. Trading across Borders: Georgia made export and import documentary compliance faster by improving its electronic document processing system, as well as, introduced an advanced electronic document submission option. DB2016 Dealing with Construction Permits: Georgia made dealing with construction permits easier by reducing the time needed for issuing building permits. Enforcing Contracts: Georgia made enforcing contracts easier by introducing an electronic filing system for court users. DB2015 Labor Market Regulation: Georgia reduced the maximum duration of fixed-term contracts and introduced a notice period for redundancy dismissals. DB2014 Getting Credit: Georgia improved its credit information system by implementing a new law on personal data protection. Page 56 Doing Business 2019 Georgia DB2013 Getting Electricity: Georgia made getting electricity easier by simplifying the process of connecting new customers to the distribution network and reducing connection fees. Getting Credit: Georgia strengthened its secured transactions system through an amendment to the civil code allowing a security interest to extend to the products, proceeds and replacement of collateral. Paying Taxes: Georgia made paying taxes easier for companies by enhancing the use of electronic systems and providing more services to taxpayers. Trading across Borders: Georgia reduced the time to export and import by creating customs clearance zones. Enforcing Contracts: Georgia made enforcing contracts easier by simplifying and speeding up the proceedings for commercial disputes. Resolving Insolvency: Georgia expedited the process of resolving insolvency by establishing or tightening time limits for all insolvency- related procedures, including auctions. DB2012 Starting a Business: Georgia simplified business start-up by eliminating the requirement to visit a bank to pay the registration fees. Getting Credit: Georgia expanded access to credit by amending its civil code to broaden the range of assets that can be used as collateral. Protecting Minority Investors: Georgia strengthened investor protections by introducing requirements relating to the approval of transactions between interested parties. Paying Taxes: Georgia made paying taxes easier for firms by simplifying the reporting for value added tax and introducing electronic filing and payment of taxes. DB2011 Getting Credit: Georgia improved access to credit by implementing a central collateral registry with an electronic database accessible online. Protecting Minority Investors: Georgia strengthened investor protections by allowing greater access to corporate information during the trial. Enforcing Contracts: Georgia made the enforcement of contracts easier by streamlining the procedures for public auctions, introducing private enforcement officers and modernizing its dispute resolution system. Resolving Insolvency: Georgia improved insolvency proceedings by streamlining the regulation of auction sales. DB2010 Dealing with Construction Permits: Georgia made dealing with construction permits easier by simplifying the process of obtaining confirmation from utilities, introducing a risk-based approval process for building permits and setting new time limits for issuance of the occupancy certificate. Trading across Borders: Georgia reduced the cost of trade and simplified the documentation requirements for exporting and importing. DB2009 Starting a Business: Georgia made starting a business easier by eliminating the minimum capital requirement, abolishing the requirements for a company seal and company charter and making the use of notaries optional. Registering Property: Georgia made registering property easier by eliminating the requirement for several documents and simplifying and reducing the registration fees. Getting Credit: Georgia strengthened its secured transactions system by allowing parties to agree to out-of-court enforcement of the creditor’s security right when signing the agreement, began distributing full information at the private credit bureau, and started guaranteeing borrowers’ right to inspect their own data. Paying Taxes: Georgia made paying taxes less costly for companies by reducing the corporate income tax rate and abolishing the social tax. Page 57 Doing Business 2019 Georgia DB2008 Starting a Business: Georgia made starting a business easier by making tax authorities responsible for state and tax registration and eliminating the paid-in minimum capital requirement. Dealing with Construction Permits: Georgia made dealing with construction permits easier by implementing a one-stop shop for utility connections, simplifying the procedures for obtaining an occupancy permit and eliminating the requirement for several documents. Registering Property: Georgia made transferring property easier by eliminating the notarization requirement for the sale agreement and reducing the time required to obtain an entrepreneurial registry excerpt of the seller’s/purchaser’s registration from the district court. Getting Credit: Georgia’s private credit bureau—which already collected credit data from 17 of the country’s 18 banks along with microfinance institutions, cell phone and electricity companies, and the courts—began also collecting data from retailers, utilities and trade creditors. Protecting Minority Investors: Georgia strengthened investor protections by amending its securities law to enhance approval and disclosure requirements for related-party transactions. Resolving Insolvency: Georgia enhanced its insolvency process through a new insolvency law introducing both reorganization and liquidation proceedings, tightening time limits for the completion of each stage of the bankruptcy process and instituting provisions for regulating the appointment of bankruptcy trustees. Page 58 Doing Business 2019 Georgia Page 59