Georgia exporters are keen to tap new markets, but many of them are unaware of beneficial tax structures that could help them keep more money on existing export sales, according to a newly released survey of more than 120 exporters by Habif, Arogeti & Wynne LLP.
More than half of exporters said tax incentives could help them sell more internationally, but nearly two-thirds had failed to consider tax strategies like the IC-DISC, a structure that lowers tax on export sales, or moving their intellectual property abroad.
“Transfer pricing policies, IC-DISC, tax structuring and other incentives can produce a substantial reduction in international tax, protect exporters from exposure and increase the overall benefit a company receives from exporting,” Yelena Epova, partner-in-charge of international services, said in the report. “Exporters and potential exporters should make sure that they are investigating these options so that no money is being left on the table.”
The report also revealed a lack of understanding about trade agreements and how they might affect companies. More than one-third of companies were not familiar with trade agreements like the Trans-Pacific Partnership deal the U.S. recently reached with 12 countries or the Trans-Atlantic Trade and Investment Partnership proposed with the European Union. About one-third said that neither would affect their sales.
This is a potential oversight by companies, Ms. Epova said, as trade agreements have a strong bearing on supply chains and can be vital in opening up new possibilities for companies.
“Exporters should make sure that they are staying on top of trade agreements as they are negotiated,” she said. “Even for companies who are not currently exporting, trade agreements can bring provisions that turn a once-disadvantageous exporting situation into a huge opportunity.”
About one-fifth of exporters said trade agreements were one factor in determining which markets they considered next, though and looking at market fundamentals and following leads generated from trade shows or online were far more important.
Despite 2016 headwinds including currency fluctuation and difficulty finding the right international partners, exporters were still aiming to grow market share in existing countries and break into new ones.
Though relatively small in terms of population, Australia figured heavily in the minds of survey participants, with more than a quarter saying they would pursue sales in that faraway country. The next four top potential markets — respondents could select more than one — were Colombia (23.6 percent), the United Arab Emirates (23.6 percent), Brazil (20 percent) and Chile (16.3 percent). Respondents’ current export sales were scattered throughout all regions of the world pretty evenly. About two-thirds said their international sales had climbed over the last five years.
The report includes a number of other insights, including that companies covet government support in cultivating new markets, about three-fourths have foreign subsidiaries incorporated outside the U.S. and nearly half have failed to adjust their hiring practices in response to increased exports.
HA&W conducted the survey in partnership with Global Atlanta and the Center for International Business Education and Research at Georgia State University. More than 120 companies responded, with revenues ranging from $10 million to $500 million. Survey participants were entered to win an Apple Watch Sport. Alvaro Bolivar, international sales manager of MM Systems Corp., was randomly selected as the winner.