Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
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• Draft <strong>and</strong> notarize an application to <strong>the</strong> court (<strong>the</strong> application must include <strong>the</strong> name <strong>of</strong><strong>the</strong> company, <strong>the</strong> type <strong>of</strong> legal entity, its legal address, its business activities, <strong>and</strong>information on <strong>the</strong> company founders)• If <strong>the</strong> charter capital is in cash, obtain a bank statement showing that <strong>the</strong> cash has beencontributed to <strong>the</strong> business; if <strong>the</strong> charter capital is contributed in-kind, obtain adocument from an auditor attesting to <strong>the</strong> value• Pay <strong>the</strong> registration fee• Submit <strong>the</strong> documentation to <strong>the</strong> courtThe Court <strong>the</strong>n issues an Enterprise Registration Certificate. The “silence is consent”principle applies. If <strong>the</strong> court fails to ei<strong>the</strong>r register <strong>the</strong> business or formally reject itsapplication within a specified period, <strong>the</strong> business is considered registered. In such cases, <strong>the</strong>court must issue <strong>the</strong> registration certificate immediately upon request. The statutory time inwhich a court must make a decision has declined from 15 days in 1997 to <strong>the</strong> current fivecalendar days, in effect since May 2003. The World Bank’s Doing Business report has recentlynoted this important step taken by Georgia as a lesson for o<strong>the</strong>r countries:After court registration, <strong>the</strong> business must register with <strong>the</strong> Tax Department in <strong>the</strong>region in which <strong>the</strong> enterprise has its legal address. The enterprise submits <strong>the</strong> appropriate taxforms <strong>and</strong> <strong>the</strong> Tax Department completes <strong>the</strong> registration within five days. The enterprise is<strong>the</strong>n given an eight-digit tax code <strong>and</strong> a corresponding tax registration certificate. If applicable,<strong>the</strong> enterprise must also register as a VAT payer. At <strong>the</strong> same time as it registers with <strong>the</strong> TaxDepartment, <strong>the</strong> business must obtain a corporate seal, open a bank account, <strong>and</strong> submit itsbanking details to <strong>the</strong> tax agency.There are many factors hindering <strong>SME</strong> promotion: budget deficit, corruption,bureaucracy, hard tax system, obstacles from monopoly companies etc. The main burdens <strong>of</strong><strong>SME</strong> promotion are inefficient tax system, corruption <strong>and</strong> high level <strong>of</strong> contrab<strong>and</strong>. <strong>SME</strong> sectorcannot be developed without creation <strong>and</strong> implementation <strong>of</strong> strong government supportsystem or providing <strong>the</strong>m priority regime <strong>of</strong> support.The political changes brought about by <strong>the</strong> so called “Rose Revolution” enabled <strong>the</strong>establishment a new framework for <strong>the</strong> consolidation <strong>of</strong> national identity. The Governmentcommitted itself to restore territorial integrity <strong>and</strong> develop <strong>the</strong> country as a modern Europeanstate. One <strong>of</strong> <strong>the</strong> reform priorities <strong>of</strong> <strong>the</strong> Government is improving business environment. Theoutgoing Georgian Government issued <strong>the</strong> President Decree No. 61 on “Establishment <strong>of</strong> <strong>the</strong>Position <strong>of</strong> The State Minister on <strong>SME</strong> Field” as <strong>of</strong> 10 April 2004. The legal basis <strong>and</strong>infrastructural support in Georgia is <strong>the</strong> weakest among <strong>the</strong> three Caucasian countries. In thisconcern it is obvious that <strong>the</strong> Rose Revolution has already paved <strong>the</strong> way for elaboration <strong>of</strong> <strong>the</strong>coherent <strong>and</strong> transparent state policy for entrepreneurship.Objective <strong>of</strong> Government support policy:1) Simplify taxation, registration procedure, licence, account <strong>and</strong> report system for <strong>SME</strong>s2) Financial support (loans) <strong>and</strong> infrastructure creation3) Activities <strong>of</strong> control, supervisory, monitoring <strong>and</strong> legal institutions concerning <strong>SME</strong>sDuring <strong>the</strong> last two year in order to make <strong>the</strong> business environment more attractive forforeign direct investors, <strong>the</strong> Government made significant efforts improving several businessprocedures. As contradiction in some fields doing business became more difficult includingtraiding across boarded as well as in closing business. The Table below indicate <strong>the</strong> rankin <strong>and</strong>realtive changes.115