VII.  Investment Climate

Georgia is relatively open to foreign investment and is not
opposed to foreign ownership of Georgian companies.  Previously,
Georgia placed great reliance upon pre-existing all-Soviet Union
laws to regulate foreign investment and foreign companies'
activities in the country.  Supervision of the financial and
commercial activities of foreign investor-funded businesses is
exercised by State Auditing Agencies.

Georgia's banking regulation of July 1993 allows foreign
companies to open a current account and an interest-bearing
account in coupons by depositing their dividends and income, if
received, through the sale of foreign currency to the National or
authorized banks, and through the sale of NBG securities.

Property contributed by foreign investors in accordance with the
firm's articles of incorporation, as well as foreign investors'
personal-use property, are exempt from import duties and customs
taxes.  Additionally, equipment or material imported for
industrial maintenance are exempt from import duties and customs
taxes.  Tax benefits are available to foreign companies within
specific areas of activity designated by the GOG.  In part, the
VAT does not apply to:  foreign companies' transshipment of
goods, goods (works, services) exported by a manufacturer, and
services (loading, unloading and transporting) related to above
goods; goods and services intended for foreign diplomatic
organizations;  agricultural raw materials and products; wheat
and rye flour; wheat and rye bread; children's food products;
school and pre-school books and literature; operations related to
receiving insurance;  financial operations related to credits,
deposits, settlement, etc.; operations related to the circulation
of securities, except brokerage and other mediatorial services;
services imposed by state regulations; income collection from
casino and gambling business;  patents, copyrights and licenses;
medicines; public health care equipment; re-export of goods (if
storage period in Georgia does not exceeds six months);
transshipment of goods of foreign companies through Georgia;
imported goods stored in the country's customs warehouses;  goods
temporarily located in Georgia; and goods brought to Georgia as
humanitarian aid.

In addition, foreign investor companies have an Enterprise
Property Tax holiday for the first year of operations, and a 50-
percent reduced tax period for the next two years.  If a company
is liquidated or reorganized within four years, full tax payment
for the whole period of its operations will be required.  This
reduced tax regulation is not valid for reorganized companies or
new companies created on the basis of existing ones.

--  Foreign Trade Zones/Free Ports

There are no foreign trade zones and free ports in Georgia yet.