Introduction: Prevention is Better Than Cure
Tax Compliance Advisory is a proactive service aimed at bringing a company's activities into full compliance with Georgian tax legislation. Unlike tax disputes, where the problem has already occurred, compliance advisory focuses on preventing risks. Tax regulations in Georgia change frequently, and the Revenue Service's approaches evolve. It is difficult for businesses to constantly keep track of all updates. A professional tax consultant acts as a "health check": assessing existing processes, identifying hidden threats, and providing recommendations, which protects the company from fines, sanctions, and reputational damage.
What Does Tax Compliance Service Cover?
This service covers every aspect of a company's tax life. Specialists perform:
- Mock Audit: Checking the company using the same methodology as the tax inspectorate to identify weak points in advance.
- Transaction Structuring: Analyzing planned contracts and operations from a tax perspective to choose the most optimal and legal path.
- Developing Tax Policy: Creating internal documents that regulate tax calculation and payment procedures within the company.
- Transfer Pricing Analysis: Checking the compliance of transactions between related parties with market principles.
- Monitoring Legislative Changes: Informing the client about new regulations affecting their business.
- Determining Residency and Permanent Establishment Status: Assessing the risks of tax liability arising in Georgia for international companies.
Common Situations and Scenarios
Imagine a company that has been incorrectly using a tax break for years. During a compliance check, the consultant discovers this error. If the tax authority had found it, the company would face a 50% penalty, but with the consultant's advice, the company makes a self-correction (amended declaration) and pays only the principal amount and interest, saving a large sum. A second scenario involves international transactions: a Georgian company pays service fees to a non-resident. The consultant checks the Double Taxation Avoidance Treaty and advises the client to request a residency certificate, thereby avoiding 10% withholding tax. A third case is the risk of reclassifying labor relations: the consultant checks whether the company has "hidden employment relations" with service-providing individual entrepreneurs.
Georgian Legal Framework
The service relies on the Tax Code of Georgia, which is the primary regulatory document. Of particular importance is the General Part of the Code, which defines terms and establishes tax obligations. Additionally, consultants use Orders of the Minister of Finance and Situational Manuals of the Revenue Service, which interpret specific norms. In the international aspect, Double Taxation Avoidance Treaties effective in Georgia and regulations adopted under the BEPS (Base Erosion and Profit Shifting) initiative are important.
Process: How Does a Consultant Work?
The process begins with "diagnostics"—the consultant reviews the company's accounting database, contracts, and past declarations. They conduct interviews with the finance department to understand business processes. Based on identified risks, a detailed report is prepared, where risks are categorized (high, medium, low). Recommendations for correction are issued for each risk. In the case of long-term cooperation, the consultant periodically (e.g., quarterly) checks new transactions and answers management's questions in a "hotline" mode.
Why Choose a Specialist on Legal.ge?
Legal.ge offers access to the best tax experts in Georgia. Our platform features specialists with experience in both "Big Four" audit firms and the Revenue Service. This dual perspective ensures the best result. Compliance advisory is not an expense; it is an investment in your business's safety. Find a trusted advisor on Legal.ge and manage your taxes calmly and efficiently.
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