Tuesday, December 5, 2017
China and Georgia have signed an agreement on the creation of free trade zones in Georgia that would facilitate Georgia's role in China's Belt and Road initiative.
The Memorandum of Understanding was signed by Chinese Vice Minister of Commerce Qian Keming and Georgia's First Vice Prime Minister and Minister of Economy and Sustainable Development, Dimitry Kumsishvili, at the "Tbilisi Belt and Road Forum" on November 28.
The Belt and Road initiative is a Chinese-led strategy to bind the economies and cultures of more than 60 countries by land and sea. The aim is that by 2050 the Belt and Road region will account for 80 percent of global GDP growth, and three billion more people will be advanced into the middle class.
According to news reports, the two ministers also confirmed that the China-Georgia Free Trade Agreement (FTA) ratified in May 2017 would come into effect from January 1, 2018. Under the terms of the deal Georgia will eliminate tariffs on 96.5 percent of tariff lines, and within five years China will remove tariffs on 93.9 percent of tariff lines on products from Georgia.
China has signed a number of agreements to support other countries to develop their own tax-privileged economic zones as part of its push to further its trade relations along the Belt and Road. At the end of November China signed a similar deal with Panama on the creation of such zones there.
Free trade zones offer a number of tax advantages that make them attractive to businesses. Typically these can include exemption from corporate income taxes, sales taxes or value-added taxes, lower rates of tax on outbound dividend payments, no customs duty on goods temporary stored within the zone, and reductions to import and export duties. They can also include waivers to restrictions that are otherwise in place on foreign investment.