On Supporting the Development of Free Tourism Zones

Law of Georgia

on Supporting the Development of Free Tourism Zones

Law of Georgia No 4123 of 17 December 2010 – LHGI, No 75, 27.12.2010, Art. 488

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Article 1 – Purpose of the Law

The purpose of this Law is to develop tourism and promote entrepreneurship in Georgia. To achieve this aim, this Law determines the conditions, as well as tax and other privileges, for the construction and operation of hotels in free tourism zones.

Law of Georgia No 4123 of 17 December 2010 – LHGI, No 75, 27.12.2010, Art. 488

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Article 2 – Scope of the Law

1. This Law shall apply to free tourism zones existing in the territory of Georgia. The coordinates of such zones are determined by an ordinance of the Government of Georgia.

2. The coordinates of free tourism zones referred to in paragraph 1 of this article may be determined only in the territory that is adjacent to a territory with undeveloped tourism infrastructure, but with potential for tourism development.

Law of Georgia No 4123 of 17 December 2010 – LHGI, No 75, 27.12.2010, Art. 488

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6576 of 28 June 2012 – website, 5.7.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 3 – Definition of terms

The terms used in this Law have the following meanings for the purposes of this Law:

a) hotel – a building and/or a single complex of buildings and structures, which has its own infrastructure and is designated as a hotel under the relevant draft construction documents. A hotel shall be of a medium or high class. The criteria that define the class of the hotel are established by the Ministry of Economy and Sustainable Development of Georgia (‘the Ministry’);

b) investor – a person (business entity), who constructs a hotel and ensures its operation in accordance with this Law;

c) a free tourism zone – a zone where the conditions and privileges provided for in this Law are applied;

d) a property administrator – a property administrator as defined by the Law of Georgia on State-Owned Property, and the Ministry of Finance and Economy of the Autonomous Republic of Adjara;

e) an activity compatible with the activity of a hotel – renting out hotel rooms and providing services directly related to this activity, as well as the operations of a hotel’s catering facilities, spa centres, recreation/fitness centres, pools, aqua parks, sports areas and conference halls.

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 4 – Rights and obligations of investors

1. An investor may:

a) dispose of a hotel as provided for by the legislation of Georgia and notify the property administrator about it within a reasonable time;

b) take advantage the privileges provided for in this Law;

c) make certain alterations to the construction design of the hotel with the approval of the property administrator;

d) apply to the Commission established by the Government of Georgia to create a free tourism zone on the parcel of land owned by the investor.

2. An investor shall:

a) register a separate business entity as provided for by the legislation of Georgia which will perform only the activities provided for in this Law (construction and operation of hotels);

b) submit an application and provide information to the property administrator on the amount of investment to be made for the construction of the hotel;

c) invest at least GEL 1 000 000 in the construction of each hotel;

d) construct a medium and/or high class hotel in accordance with the conditions and procedure provided for in this Law;

e) ensure the operation of the hotel in accordance with the criteria established by the Ministry for the relevant hotel class;

f) (deleted – 10.12.2015, No 4599);

g) in the case referred to in paragraph 1(d) of this article, present a bank guarantee of at least 10% of the proposed investment amount to the Commission established by the Government of Georgia. The validity period of the guarantee shall exceed the hotel construction period by at least two months, unless otherwise decided by the Commission.

3. If an investor performs activities that require licences or permits in the territory determined by this Law, he/she shall obtain the required licence and/or permit in accordance with the legislation of Georgia, except as provided for by this Law.

4. The privileges and obligations of this Law referred to in paragraph 1(b) of this article shall apply to a new owner as well.

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6382 of 5 June 2012 – website, 15.6.2012

Law of Georgia No 6376 of 5 June 2012 – website, 19.6.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 5 – Preferential treatment

1. An investor shall be exempted from:

a) property and profit tax provided for by the Tax Code of Georgia with regard to the implementation of activities compatible with the activities of a hotel in a free tourism zone, from the date of putting the hotel into operation up to the period defined by the Tax Code of Georgia, provided that the conditions laid down by this Law are satisfied;

b) the construction permit fee.

2. A relevant parcel of land shall be transferred into the ownership of an investor as provided for by the legislation of Georgia for the nominal price of GEL 1, except for the case referred to in Article 4(1)(d) of this Law.

3. The privileges determined by this Law, except for the one specified in paragraph 2 of this article, shall not apply if the investor no longer ensures the operation of the hotel.

4. If an investor does not fulfil his/her duty to put the hotel into operation within the period determined by this Law, the property administrator may specify a reasonable additional period for the fulfilment of this duty as provided for by the legislation of Georgia.

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6382 of 5 June 2012 – website, 15.6.2012

Law of Georgia No 6376 of 5 June 2012 – website, 19.6.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 6 – Activities to be implemented by the State

1. The Government of Georgia, in accordance with the legislation of Georgia, shall ensure that:

a) the appropriate infrastructure (gas, water, sewerage system, electricity) connected to the hotel building is in good order or new infrastructure is built, if required;

b) the hotel access roads are constructed and maintained;

c) the parcel of the land in the territory of the hotel is equipped with amenities and is landscaped within reasonable limits;

d) the status of a facility of particular importance provided for by the legislation Georgia is awarded to the hotel defined by this Law and a construction permit is issued under a simplified procedure.

2. The property administrator shall ensure the gratuitous transfer of the hotel’s construction design to the investor.

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6382 of 5 June 2012 – website, 15.6.2012

Law of Georgia No 6576 of 28 June 2012 – website, 5.7.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 7 – Procedure for transferring parcels of land into the ownership of investors

1. In the cases provided for by this Law, parcels of land shall be transferred into the ownership of investors in accordance with the legislation of Georgia, based on a decision of the Commission established by the Government of Georgia.

2. (Deleted – 5.5.2011, No 4647).

3. The Commission shall be headed by the Minister of Economy and Sustainable Development of Georgia.

4. The composition, statute and the decision-making procedure of the Commission shall be approved by an ordinance of the Government of Georgia.

5. The Commission shall review the application and information submitted by the investor and decide, within two weeks of submission, upon the reasonableness of transferring the parcel of land into the ownership of the investor and/or of creating a free tourism zone on the property owned by the investor. In the case referred to in Article 4(1)(d) of this Law, the Commission shall review the application and decide on a case-by-case basis, upon the implementation of the measures specified in Article 6 of this Law with regard to the investor.

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6376 of 5 June 2012 – website, 19.6.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 8 – Liability

1. If an investor fails to fulfil his/her duty to put the hotel into operation within the period determined in Article 9(3) of this Law, or within the reasonable additional period specified by the property administrator, he/she shall be deprived of the parcel of land transferred into his/her ownership and of the immovable property located on it, except for the case referred to in Article 4(1)(d) of this Law.

2. In the case of a free tourism zone as referred to in Article 4(1)(d) of this Law, the status of free tourism zone of a parcel of land and all associated privileges shall be withdrawn after the reasonable additional period referred to in paragraph 1 of this article expires without result.

Law of Georgia No 6376 of 5 June 2012 – website, 19.6.2012

Law of Georgia No 4599 of 10 December 2015 – website, 22.12.2015

Article 9 – Transitional provisions

1. The Government of Georgia shall:

a) approve the composition, statute and the decision-making procedure of the Commission within two weeks after the entry into force of this Law;

b) by 1 December 2010, present to the Parliament of Georgia draft amendments to be made to the relevant legislative acts.

2. Within one month after the entry into force of this Law, the Ministry of Economy and Sustainable Development of Georgia shall approve:

a) the criteria for medium and high class hotels referred to in Article 3(a) of this Law in accordance with international standards;

b) activities compatible with the hotel profile referred to in Article 4(2)(f) of this Law.

3. The date of commissioning the hotel building and of the beginning of the operation of the hotel shall be determined by the Commission established under Article 7 of this Law.

Article 10 - Entry into force of the Law

This Law shall enter into force upon promulgation.

President of Georgia                                                                                                                                                     M. Saakashvili

Tbilisi,

26 October 2010

No 3754–IIS

Annex No 1

(Deleted)

Law of Georgia No 6576 of 28 June 2012 – website, 5.7.2012

Annex No 2

(Deleted)

Law of Georgia No 4123 of 17 December 2010 – LHGI, No 75, 27.12.2010, Art. 488

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6576 of 28 June 2012 – website, 5.7.2012

Annex No 3

(Deleted)

Law of Georgia No 4647 of 5 May 2011 – website, 13.5.2011

Law of Georgia No 6576 of 28 June 2012 – website, 5.7.2012