By Gela Barshovi, Tax Advisor and Managing Partner at TPsolutions, Tbilisi, Georgia.
On 2 December, Georgia’s minister of finance published Decree #366, amending the Georgian transfer pricing rules.
The main legislative source of Georgia’s transfer pricing legislation is provided in Decree #423. The decree explains that if an issue is not described in the legislation, reference should be made to the 2010 OECD transfer pricing guidelines. In other words, the 2010 OECD transfer pricing guidelines had the force of law in Georgia if an issue is not covered in the local transfer pricing rules.
New Decree #366 updates the reference to the 2010 OECD transfer pricing guideline, providing that the 2017 version should instead apply.
As such, the transfer pricing outcomes of the OECD/G20 base erosion profit shifting (BEPS) plan, including key changes made in the updated guidelines (e.g. chapter one), are now reflected in Georgian law.
Transfer pricing rules have been a part of the Georgian tax code since January 2011. However, those rules made reference to a Ministry of Finance decree which was not been published until 2013.
Georgia subsequently enacted full transfer pricing legislation; however, the practical application of the transfer pricing law did not begin until 2015 when the Georgian tax administration established a special transfer pricing division.
Since 2013, Georgia’s transfer pricing law has made an explicit reference to OECD transfer pricing guidelines.
Gela Barshovi
Gela Barshovi is Tax Advisor and Managing Partner at TPsolutions, Tbilisi, Georgia.
Gela was Chief Tax Auditor and Group Leader of the Georgian Tax Administration's international tax division from 2010--2017. He represented Georgia as a member of Working Party 6 during the OECD/G20 BEPS project negotiations. He has taught taxation at different academies since 2015.
Gela also worked as a transfer pricing consultant with BDO in Vienna, Austria, and as a senior associate in the tax group of Comparex AG, in Leipzig, Germany.
He holds a master’s degree in international tax law from Vienna University of Economics and Business (WU).
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