BUSINESS
Local Spirit Distillers Exempted from Excise
03 May, 2012

Georgian spirit-containing drink producers are exempted from excise tax and supposed to enhance their export potential. 

 

Jaba Ebanoidze, head of Revenue Service of Georgia, along with Zaza Gorozia, the Minister of Agriculture of Georgia, met with Georgian wine and spirit producer companies on April 25, 2012 to inform of tax preference, exempting the locally distilled brandy spirit from excise tax if they are supplied to local alcohol-drink producing companies, thus making local spirit production competitive compared to the imported product.

Until this

change Georgian spirit distillers paid GEL 4.60 per liter of spirit similarly to the imported spirit, and to avoid charging brandy and alcohol drinks producers using the imported spirit in so called processing regime that works according to the following scheme: the imported product is processed and exported again and the exporter gets back the excise paid on the import. Now when local spirit production is excise-free brandy producer companies do not need to import spirit in the processing regime anymore and spend lots of time and money as well as efforts include customs procedures.

“Now they can buy locally produced spirit and do not implement import from abroad thus we can compete the imported spirit hence forth, and the sum earmarked on imported spirit procurement can now be reinvested in the company development and export expansion,” Ebanoidze underlined.

Gorozia  accentuated that since Georgian alcohol drinks producing companies will not pay excise for the locally distilled spirit they will expand production and export likewise, become more competitive against their foreign rivals and  hit new export markets ultimately. Accordingly, demand on locally distilled spirit will increase and this will have a complex positive impact on development of Georgian viticulture.

Georgian producers are happy over the tax-exemption for it spares from extra costs and time wastes, besides the spirit imported from France mainly is of lower quality than the locally produced.

“This is a very profitable decision from both commercial and moral points of view, “Davit Abzianidze, General Technologist of Davit Sarajishvili Company [a legal assignee of Davit Sarajishvili the first cognac company in the South Caucasus established in 1887] said in the interview with Georgian Journal. “We have been producing our product based on the imported spirit in processing regime for it was cheaper that paying excise for locally produced spirit. We also distill spirit but it is not enough for export quantities and we had no other way but now we will base our production on local spirit that is of much better quality than imported in fact.”

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