Strategies of the Development of Entrepreneurship and SME

• Draft and notarize an application to the court (the application must include the name ofthe company, the type of legal entity, its legal address, its business activities, andinformation on the company founders)• If the charter capital is in cash, obtain a bank statement showing that the cash has beencontributed to the business; if the charter capital is contributed in-kind, obtain adocument from an auditor attesting to the value• Pay the registration fee• Submit the documentation to the courtThe Court then issues an Enterprise Registration Certificate. The “silence is consent”principle applies. If the court fails to either register the business or formally reject itsapplication within a specified period, the business is considered registered. In such cases, thecourt must issue the registration certificate immediately upon request. The statutory time inwhich a court must make a decision has declined from 15 days in 1997 to the 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 other countries:After court registration, the business must register with the Tax Department in theregion in which the enterprise has its legal address. The enterprise submits the appropriate taxforms and the Tax Department completes the registration within five days. The enterprise isthen given an eight-digit tax code and a corresponding tax registration certificate. If applicable,the enterprise must also register as a VAT payer. At the same time as it registers with the TaxDepartment, the business must obtain a corporate seal, open a bank account, and submit itsbanking details to the tax agency.There are many factors hindering SME promotion: budget deficit, corruption,bureaucracy, hard tax system, obstacles from monopoly companies etc. The main burdens ofSME promotion are inefficient tax system, corruption and high level of contraband. SME sectorcannot be developed without creation and implementation of strong government supportsystem or providing them priority regime of support.The political changes brought about by the so called “Rose Revolution” enabled theestablishment a new framework for the consolidation of national identity. The Governmentcommitted itself to restore territorial integrity and develop the country as a modern Europeanstate. One of the reform priorities of the Government is improving business environment. Theoutgoing Georgian Government issued the President Decree No. 61 on “Establishment of thePosition of The State Minister on SME Field” as of 10 April 2004. The legal basis andinfrastructural support in Georgia is the weakest among the three Caucasian countries. In thisconcern it is obvious that the Rose Revolution has already paved the way for elaboration of thecoherent and transparent state policy for entrepreneurship.Objective of Government support policy:1) Simplify taxation, registration procedure, licence, account and report system for SMEs2) Financial support (loans) and infrastructure creation3) Activities of control, supervisory, monitoring and legal institutions concerning SMEsDuring the last two year in order to make the business environment more attractive forforeign direct investors, the 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 the rankin andrealtive changes.115