on Supporting An Olympic Movement

LAW OF GEORGIA

ON SUPPORTING AN OLYMPIC MOVEMENT

Article 1 - General Provisions

This Law determines the legal basis for making investments for supporting an Olympic movement in the territory of Georgia and guarantees for protecting such investments.

Article 2 - Definitions of terms

The terms used in this Law have the following meaning:

a) investor - a person who, on the basis of an agreement entered into with the Government of Georgia, is building an Olympic Village and other auxiliary facilities necessary for organising Olympics (including Youth Olympic Festival);

b) Olympic Village - a territory developed under an agreement entered into between the Government of Georgia and an investor for conducting Olympics; 

c) agreement - an agreement entered into between the Government of Georgia and an investor;

d) contractor - an enterprise operating in Georgia as provided for by the Tax Code of Georgia, which, commissioned by an investor is building an Olympic Village in the territory defined in an agreement, and other auxiliary facilities necessary for organising Olympics, as well as facilities necessary for the operation of a Free Industrial Zone, customs warehouse or special trade zone and/or is conducting other construction works envisaged by an agreement.  

Article 3 - Investor’s rights

An investor may:

a) exercise all the rights enjoyed by legal persons registered in Georgia; 

b) establish, in the territory envisaged by an agreement, a free industrial zone, customs warehouse, special trade zone and other facilities as provided for in an agreement in accordance with the legislation of Georgia;

c) where necessary, independently attract additional investments for the construction; 

d) enjoy preferential tax treatment provided for by the legislation of Georgia;

e) enjoy other rights provided for by an agreement.

Article 4 - Investors' obligations

An investor shall:

a) conduct activities in accordance with the legislation of Georgia.

b) on the basis of an agreement, build the Olympic Village and other auxiliary facilities necessary for organising Olympics (including a Youth Olympic Festival) in the territory of Georgia;

c) during the conduct of the Olympics, transfer for gratuitous use, the facilities specified in sub-paragraph (b) of this article to the body envisaged by an agreement; 

d) perform other obligations under an agreement;

Article 5 - Taxation of investors and contractors

1. Investors and contractors shall be taxed under this Law and the Tax Code of Georgia. 

2. An investor shall, for 10 years after the commencement of the construction envisaged by an agreement, be exempt from:

a) the value added tax and import tax: 

a.a) when importing building and decorative materials for the construction envisaged by an agreement;

a.b) when importing machinery, motor vehicles (except for light vehicles) and other mechanical equipment for the construction envisaged by an agreement;

a.c) when importing inventory, furniture and other equipment (in accordance with the list defined by the Government of Georgia) necessary for proper operation of a five-star hotel envisaged by an agreement and of other auxiliary facilities necessary for organising the Olympic Village and Olympics (including a Youth Olympic Festival) before the commencement of the Olympic Festival; 

b) the profit tax in relation to the activities performed under an agreement; 

c) the taxation of dividends at source in relation to the activities performed under an agreement; 

3. The VAT paid by investors for the goods/services purchased in Georgia within the scope of the activities performed under an agreement shall be returned to the investor by the Minister of Finance of Georgia in a prescribed manner. 

4. Investors shall be taxed with property tax and property tax on land at the rate established for this territory by the representative body of the local self-government.  In addition, an investor shall be exempt from property tax and property tax on land for 5 years after the commencement of the construction of the Olympic Village.

5. A contractor shall, for 10 years after commencement of the construction, be exempt from profit tax with respect to compensation received/receivable from the investor for the construction activities performed on the plot of land envisaged by an agreement.

6. After the lapse of 10 years from commencement of the construction envisaged under an agreement, the investor and the contractor may not deduct the uncompensated loss of the previous period (in any).

7. In the case of transfer of property by the investor, a new investor (except for one specified in Article 2 of this Law) shall not be subject to the tax treatment determined by this article for investors.

Article 6 - Dispute settlement procedure

Any disputes between an investor and public agencies shall be settled in court unless another dispute-settlement procedure is defined under an agreement.

Article 7 - Entry into force of the Law

1. This Law shall apply to legal relationships arising from 1 January 2012.

2. This Law shall enter into force upon its promulgation.

President of Georgia                                                                                                                              M. Saakashvili

Tbilisi

15 May 2012

№6175-რს