Georgia

Specific provisions on Transfer Pricing were established in 2011 when the new Tax Code came into force.

On December 18, 2013, the Minister of Finance of Georgia signed Decree 423, “On Approval of the Instruction on International Transfer Pricing” (the Decree). The Instruction clarifies the Transfer Pricing principles set forth in the Tax Code.

Arm’s Length Principle

The “Arm’s Length Principle” states that the amount collected by one related party with another for a given product or service must be the same for unrelated parties.

Related Parties

Article 126 of the Tax Code states that:

Two persons shall be related parties if:
One person directly or indirectly participates in the management, control, or capital of another person.
The same persons directly or indirectly participate in the management, control, or capital of two persons.
A person directly or indirectly participates in the management, control, or capital of an enterprise if:
This directly or indirectly owns more than 50% of an enterprise;
This actually controls the business decisions of an enterprise.

Please note that the reference to ownership in 2(a) above refers to ownership.

Transfer Pricing Methods

Similar to the “OECD Guidelines,” the local legislation provides five methods for determining the Arm’s Length nature of a controlled transaction:

Comparable Uncontrolled Price Method.
Cost Plus Method.
Resale Price Method.
Profit Split Method.
Transactional Net Margin Method.

Transfer Pricing Documentation

The Georgian Transfer Pricing rules do not require multinationals to file a Master File or a Local Report. Conversely, Decree 423 states that the Transfer Pricing documentation (similar to the local filing) shall be provided within 30 days after the request of the Georgian tax authority.

The Transfer Pricing documentation must be kept and filed in Georgian or English to the Georgian Tax Agency upon written request.

Country-by-Country Report

An Ultimate Parent Entity of a multinational group residing for tax purposes in Georgia shall file a Country-by-Country Report to the Georgian Tax Administration no later than December 31 of the subsequent tax year.

In addition, the constituent entity of a multinational group residing for tax purposes in Georgia shall notify the Georgia Tax Administration whether it is the Ultimate Parent Entity or the Substitute Parent Entity no later than the last day of the tax year.

Penalties

The tax legislation does not prescribe any penalties if an entity fails to prepare the Transfer Pricing Documentation.

Failure to file to the tax authority the Country-by-Country Report of a multinational group provided for in Article 701 in due time as defined by this Code or file it incompletely or incorrectly shall entail the imposition of a fine of GEL 5,000 (approximately € 1,400).

Source: Georgia Department of Revenue

<script>

  /*
 Author:       Wolfgang Hartl
 Author URI:   https://my-webcraftdesign.at/
 DOCS:         https://my-webcraftdesign.at/tutorial/read-more-read-less-toggle-in-bricksbuilder/
*/
function WCD_rmrl(options) {
  const readLessText = options.readLessText;
  const readMoreText = options.readMoreText;

  const rmrlContent = document.querySelectorAll("[wcd_rmrl_percentage]");

  rmrlContent.forEach((element) => {
    // INITIAL SETUP (define height, overflow and attributes)
    element.style.overflow = "hidden";
    element.setAttribute("wcd_rmrl_max", element.clientHeight + "px");

    var percentage = element.getAttribute("wcd_rmrl_percentage");
    var height = element.clientHeight;
    height = Math.round((height / 100) * percentage) + "px";

    element.setAttribute("wcd_rmrl_min", height);
    element.style.height = height;

    //ASSIGN CLICK EVENT TO TRIGGER
    trigger = element.nextSibling;
    trigger.addEventListener("click", function () {
      if (element.style.height == element.getAttribute("wcd_rmrl_min")) {
        element.style.height = element.getAttribute("wcd_rmrl_max");
        this.childNodes.forEach((node) => {
          if (node.nodeValue !== null) {
            node.nodeValue = readLessText;
          }
        });
      } else {
        element.style.height = element.getAttribute("wcd_rmrl_min");
        this.childNodes.forEach((node) => {
          if (node.nodeValue !== null) {
            node.nodeValue = readMoreText;
          }
        });
      }
    });
  });
}
  
  
  const rmrl = new WCD_rmrl({
    readLessText : 'Read Less',
    readMoreText : 'Read More',

  });
  
</script>