ACCOUNTING SERVICES

The Tax Benefits of International Company Status in Georgia: A Comparative Analysis with Classic LLC and JSC Structures

Georgia's dynamic and investor-friendly economic landscape has made it a prime destination for international businesses. A significant component of this appeal is the unique tax advantages offered to companies with International Company Status (ICS). This article delves into the tax benefits of ICS, comparing them with the traditional Limited Liability Company (LLC) and Joint Stock Company (JSC) structures, while also highlighting the comprehensive accounting services available to ICS companies in Tbilisi, Georgia.

Tax Benefits of International Company Status

Companies granted International Company Status in Georgia enjoy several tax benefits designed to foster an attractive business environment. These include:

1. Corporate Tax Exemption: ICS companies often benefit from reduced or even zero corporate tax rates on certain types of income, such as income from international shipping and IT services. This significant reduction in tax liability directly impacts the profitability and growth potential of the business.

2. Exemption on Dividends: Dividends distributed by ICS companies are typically exempt from withholding tax, making it more profitable for shareholders.

3. VAT Exemptions: Certain transactions conducted by ICS companies may be exempt from Value Added Tax (VAT), particularly those involving international trade and services.

4. Withholding Tax Reduction: Lower rates of withholding tax on payments made to non-residents further enhance the attractiveness of ICS.

5. Customs Duty Relief: ICS companies engaged in import-export activities benefit from reduced or waived customs duties on goods entering or leaving Georgia.

Comparison with Classic LLC and JSC Structures

While LLCs and JSCs are also popular business structures in Georgia, they do not offer the same level of tax incentives as ICS. Here’s a comparison:

1. Corporate Tax Rates: Traditional LLCs and JSCs are subject to the standard corporate tax rate of 15%. This is considerably higher than the tax rates applicable to ICS companies, potentially reducing the net income available for reinvestment and distribution.

2. Dividend Taxation: Dividends paid by LLCs and JSCs are subject to a 5% withholding tax, which, although modest, still represents an additional cost not borne by ICS companies.

3. VAT: LLCs and JSCs must charge VAT at the standard rate of 18% on most goods and services, impacting their pricing competitiveness, especially in the international market.

4. Withholding Tax: Payments to non-residents by LLCs and JSCs are subject to standard withholding tax rates, which can be higher than those for ICS companies, affecting the cost of cross-border transactions.

5. Customs Duties: Standard customs duties apply to LLCs and JSCs, increasing the cost of importing goods compared to ICS companies that may benefit from exemptions or reductions.

Comprehensive Accounting Services for ICS Companies in Tbilisi

To maximize the benefits of International Company Status and navigate the complexities of the Georgian tax system, expert accounting services are essential. Our company, based in Tbilisi, offers a full suite of accounting and tax advisory services tailored specifically for ICS companies. These services include:

• Monthly Statutory Reporting: Ensuring compliance with all local regulations through timely and accurate reporting.
• Tax Advisory: Providing strategic advice on tax planning and optimization to take full advantage of the available incentives.
• Office Management: Assisting with the search, negotiation, and setup of office spaces that meet the economic substance requirements.
• HR and Recruitment: Helping to find and manage skilled IT professionals and other staff essential for your operations.
• Legal Compliance: Maintaining the necessary legal frameworks for employee benefits, medical care, and team-building activities.

By partnering with us, ICS companies can focus on their core business activities while we handle the administrative and regulatory challenges. Our expertise ensures that you not only comply with local laws but also optimize your tax position to enhance profitability.

The tax benefits of International Company Status in Georgia provide a compelling reason for foreign investors to consider establishing their operations in the country. When compared to traditional LLC and JSC structures, ICS companies enjoy significant tax advantages that can lead to greater profitability and growth. By leveraging our specialized accounting services, ICS companies in Tbilisi can ensure they are fully compliant and positioned to maximize these benefits, allowing them to thrive in Georgia’s competitive business environment.