Transfer Pricing Services in Georgia

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Transfer Pricing Services in Georgia (country): Expert Solutions for Compliance and Strategy

Transfer pricing is a highly significant tax issue for Georgian subsidiaries of multinational companies and for Georgian (branches) permanent establishments of foreign companies, particularly when they engage in controlled transactions.

Controlled transactions involve business operations with associated foreign entities, such as the parent company (or head office in the case of a (branch) permanent establishment) or other group member companies, as well as any company based in a tax haven jurisdiction, regardless of their association.

For Georgian companies or permanent establishments involved in controlled transactions, it is crucial to prepare high-quality transfer pricing documentation. This documentation must be submitted to the Georgia Revenue Service (GRS-tax and customs administration of Georgia), upon request.

Both failure to submit Transfer Pricing documentation and submitting documentation of inadequate quality may result in the assessment of additional tax, penalties, and late payment interest by Georgian tax authorities.

Full Transfer Pricing Services in Georgia | Expertly Delivered by a Former Tax Inspector

Our Transfer Pricing services, a significant portion of which is personally conducted by Gela Barshovi, our managing partner, an experienced Transfer Pricing specialist and former leading tax inspector in the Transfer Pricing division of the Georgian tax administration, include the following:

Preparation of Transfer Pricing documentation for Georgian subsidiaries in accordance with Georgian Transfer Pricing law and OECD Transfer Pricing guidelines.
One-time and/or ongoing tax consultations regarding your company’s Transfer Pricing issues.
Support in establishing a Transfer Pricing policy for your company or the entire multinational group.
Review of inter-company agreements from a Transfer Pricing perspective.
Representation of your Georgian company before the Georgia Revenue Service (GRS) during tax inspections related to Transfer Pricing issues.
Defense of your company’s position during tax disputes within the Ministry of Finance of Georgia or before the courts of Georgia.

We specialize in taxation, particularly in Georgian tax law, Transfer Pricing, and double taxation agreements. With 14 years of experience in taxation, including twelve years specifically in Transfer Pricing, our managing partner, Gela Barshovi, is personally involved in providing these services. He has specialized in Transfer Pricing law since 2012 and was actively involved in the creation of Georgia’s Transfer Pricing legislation before it came into force. As a former tax inspector and a member of an elite group specializing in Transfer Pricing at the Georgian Revenue Service and former member of OECD/BEPS project’s working party 6, he brings invaluable expertise to our firm.

Transfer Pricing Service in Georgia: Local File Documentation Preparation by TPsolution

The Transfer Pricing documentation service provided by TPsolution typically includes these steps:

Delineating the controlled transaction: Analyzing and clearly defining the controlled transaction.
Performing a comprehensive Transfer Pricing analysis: This includes functional, risk, and asset analyses and giving the most qualification to each party of the controlled transactions (e.g. routine company, hybrid company or entrepreneur).
Conducting an economic analysis.
Selecting the most suitable tested party: Identifying the entity to which the most suitable Transfer Pricing method applies and for which comparable data is most readily available.
Choosing the most appropriate Transfer Pricing Method: Determining the method that best reflects an arm’s length result.
Selecting the most relevant Profit Level Indicator (PLI): Identifying the key financial metric of the tested party for comparison.
Benchmarking study: Conducting a benchmarking study using TP Catalyst (if external comparables are used), the same database used by GRS, to identify external comparable companies. Our familiarity with GRS’s search criteria minimizes the risk of rejection.
Range analysis and comparison: Establishing a full and interquartile range of relevant PLIs for comparable companies/transactions and comparing these to the tested party’s PLI or the price of the controlled transaction. This comparison allows us to determine whether the client’s transfer prices are consistent with market rates.

In addition to documentation, we offer reviews of inter-company agreements for tax purposes, development of Transfer Pricing policies, representation and support during the tax inspection and /or tax dispute, ongoing tax consultation on Transfer Pricing and other related issues, based on client needs.

Experienced Transfer Pricing Professional and Former Tax Inspector in Georgia. Gela Barshovi’s Expertise in Transfer Pricing

Gela’s Personal Involvement in our firm’s Transfer Pricing Projects:

Our founder and managing partner, Gela Barshovi, is an internationally recognized expert in both Georgian and global tax law. He is personally involved in every Transfer Pricing project we undertake, ensuring the highest level of expertise and attention to detail.

Initially, we provide expert advice on taxation matters, recommend the best business structure, and guide clients on the necessary documentation. We assess whether it is more advantageous to register as a company or as an individual entrepreneur. Only after this thorough consultation do we initiate the business registration process alongside our clients.

Professional Background of Gela Barshovi

Experience at the Georgian Revenue Service (GRS):
Gela began his career with nearly eight years as a leading tax inspector at the Georgian Revenue Service, including time spent in the Transfer Pricing division of GRS. This experience provided him with:
- A deep understanding of Georgian Transfer Pricing law.
- Practical knowledge of how Transfer Pricing rules are applied in Georgia, which is critical since many aspects are governed by GRS practices that are not explicitly outlined in legislation.
International Experience:
Gela has also gained extensive international experience in Transfer Pricing:
- In Austria, he worked as a Transfer Pricing consultant for an international consulting firm in Vienna.
- In Germany, he served as a senior in-house Transfer Pricing consultant at the headquarter of a multinational company in Leipzig.

Contributions to OECD and Georgian Legislation

OECD BEPS Project:

As a member of Working Party 6 of the OECD/G20 BEPS project, Gela actively participated in amending the OECD Transfer Pricing Guidelines. This involvement highlights his expertise in international Transfer Pricing standards.

Shaping Georgian Legislation:

Gela played a role in drafting Georgia’s Transfer Pricing laws during 2012–2013, further solidifying his position as a leading expert in this field.

Academic Achievements

Gela holds a Master’s degree (LL.M.) in International Tax Law (important accent on Transfer Pricing) from the Vienna University of Economics and Business (WU), one of the world’s most prestigious LLM program for tax law education.

Why to choose Gela Barshovi’s Transfer Pricing Services

Gela Barshovi possesses extensive experience across Georgia, Austria, and Germany, encompassing both the public and private sectors. This diverse background uniquely qualifies him to manage complex Transfer Pricing matters. His significant contributions to international projects, such as the Base Erosion and Profit Shifting (BEPS) initiative, along with his influence in shaping Georgian tax law and his strong academic credentials, position him as one of the leading professionals in Transfer Pricing in Georgia.

As a result, our firm is recognized as one of the highest-qualified providers of Transfer Pricing services in Georgia. We are committed to delivering top-quality services at competitive prices.

Our firm’s experience in Transfer Pricing Services in Georgia

We have experience preparing Transfer Pricing documentation for our clients related to the following types of controlled (intercompany) transactions (this list is not exhaustive):

Provision of software development services (including online game development) and related services,
Provision of support services (help-desk, call center),
Purchase and distribution of medical equipment, inventory, and consumables,
Distribution of software,
Software publishing,
Purchase, distribution, and rental of gaming machines,
Textile industry: purchase and manufacturing of textile products,
Receipt of intra-group services,
Receipt of intra-group loans,
And many others.

Benefits of Choosing TPsolution LLC as Your Transfer Pricing Service Provider in Georgia

Unmatched Commitment to Quality

Our most significant advantage lies in our commitment to quality, which stems from our high level of expertise and dedication. To ensure the highest possible quality of service, we invest at least twice the effort in every Transfer Pricing project we undertake. Therefore, if a competitor offers the same price as we do (which is lass likely), it does not necessarily reflect the same level of commitment.

Extensive Experience in Transfer Pricing

We boast the longest and most comprehensive experience in Transfer Pricing in Georgia. The majority of your Transfer Pricing documentation will be personally prepared by our managing partner, Gela Barshovi. With 14 years of experience in tax matters and 12 years specifically in Transfer Pricing, Gela ensures that your documentation meets the highest standards.

In such cases, our remote support in business registration process includes:

Drafting a relevant Power of Attorney (POA) tailored to your needs.
Advising on additional necessary documents beyond the POA for remote business registration and bank account opening.
Providing guidance on whether documents need to be notarized, apostilled, or legalized before being sent to Georgia.
Organizing translations of all documents into Georgian and obtaining approval from a Georgian notary.
Representing you at the Public Service Hall during the business registration process once all documents and notarized translations are prepared.
Providing relevant documentation confirming that your business is officially registered in Georgia with all necessary details.

For more information about the business registration process or to request our service fees, please contact us via email at Info@tpsolution.ge or fill out our contact form here: https://tpsolution.ge/contact/

In-Depth Knowledge of Legislation

We possess a deep understanding of Transfer Pricing legislation and are well-acquainted with the practices and approaches established by the Georgia Revenue Service (GRS). This familiarity gives us a significant advantage, as Transfer Prince practice established by GRS sometimes is even more important than the law itself.

In such cases, our remote support in business registration process includes:

Drafting a relevant Power of Attorney (POA) tailored to your needs.
Advising on additional necessary documents beyond the POA for remote business registration and bank account opening.
Providing guidance on whether documents need to be notarized, apostilled, or legalized before being sent to Georgia.
Organizing translations of all documents into Georgian and obtaining approval from a Georgian notary.
Representing you at the Public Service Hall during the business registration process once all documents and notarized translations are prepared.
Providing relevant documentation confirming that your business is officially registered in Georgia with all necessary details.

Proven Results

The results of our work speak for themselves. To date, there has not been a single instance where a Transfer Pricing report prepared by us was rejected by the Georgia Revenue Service following an inspection. Many of our reports have undergone rigorous scrutiny by GRS; however, there has never been a case where tax or penalty assessments were made against our clients who sought our assistance before the initiation of a tax inspection.

Objective Approach to Documentation

We do not prepare Transfer Pricing documentation merely to fulfill reporting obligations; instead, we are fully committed to identifying and minimizing transfer pricing risks throughout the documentation process. This approach ensures that our clients can truly benefit from having their Transfer Pricing documentation ready for submission.

Transfer Pricing Law in Georgia

Georgian transfer pricing law has been in effect since the end of 2013, following the publication of Transfer Pricing Decree #423 by the Ministry of Finance of Georgia. The following legislative norms govern transfer pricing issues in Georgia:

Georgian Tax Code;
Transfer Pricing Decree of Georgia;
OECD Guidelines (which address transfer pricing issues not covered by the Georgian Transfer Pricing Decree);
Internal Guidelines of the Georgia Revenue Service regarding transfer pricing.

The practical application of transfer pricing law in Georgia began in 2014, actively from 2015 with the establishment of a special transfer pricing division at the GRS. Notably, Gela Barshovi, our company’s founder, was the first tax inspector who conducted Transfer Pricing inspection in Georgia, also he served as a group leader in this division from its inception.

Transfer Pricing Reporting obligation in Georgia

Under Georgian Transfer Pricing law, a local company or a Georgian branch of a foreign entity conducting controlled transactions, is required to submit transfer pricing documentation to the Revenue Service (GRS) within 30 days of a request. Interestingly, the law also mandates that this documentation be prepared before the GRS issues its request. This seemingly contradictory requirement highlights the necessity of proactive compliance with transfer pricing regulations in Georgia.

Transfer Pricing Documentation Preparation and Submission Deadline

It is advisable to prepare the Transfer Pricing documentation either before the end of the relevant fiscal year or immediately afterward. The law stipulates that Transfer Pricing documentation should be ready at the time of GRS’s request. Also, if you choose to begin preparation only after receiving such a request, it can be extremely challenging to produce high-quality documentation within the 30-day timeframe. The preparation process involves multiple steps and thorough analysis, both of which require adequate time to ensure compliance and accuracy.

Transfer Pricing Reporting Obligation for Low Turnover Companies in Georgia

The Georgian Transfer Pricing law includes a specific exception regarding Transfer Pricing reporting obligations for companies with low annual turnover. If a Georgian entity’s annual turnover is less than 8 million GEL (approximately 2.7 million euros), it is only required to update its benchmark using external comparables once every three years. This is contingent on the condition that there have been no significant changes in the business operations of the Georgian enterprise, comparable companies, or relevant economic conditions.

However, this provision presents a paradox: without conducting annual benchmarks, how can one be certain that no changes have occurred in the operations of comparable companies? In our view, relying on this exception places an undue burden of proof on taxpayers. In practice, tax authorities may still scrutinize each year independently.

Therefore, it is strongly recommended that Transfer Pricing documentation be prepared annually and kept ready for submission. Assumption: The volume of controlled transactions is not immaterial.

Exemption from the Obligation to Prepare Transfer Pricing Documentation in Georgia

Under Georgian Transfer Pricing law, there is no specific threshold for turnover or the volume of controlled transactions that would exempt a Georgian company from preparing Transfer Pricing documentation. However, if the volume of controlled transactions is so low that the cost of preparing documentation is disproportionate to the expected benefits, it may be more prudent to seek general consultation or analysis regarding transfer pricing issues from an expert instead of preparing full transfer pricing documentation. This approach can help avoid incurring unjustifiable expenses associated with the preparation of a full Transfer Pricing report.

Penalties for Not Submitting Transfer Pricing Documentation to the Georgian Revenue Service

Completed Transfer Pricing documentation must be submitted to the Georgian tax authorities within thirty days of their request. Failure to comply with this requirement may result in fiscal penalties, including a fine of 400 GEL and a repeatable penalty of 1,000 GEL for each next instance of non-compliance with the request.

In addition to these fiscal penalties, the most significant consequence of failing to fulfill Transfer Pricing reporting obligations is that the burden of proof regarding the application of market prices shifts to the company rather than remaining with the Georgian Revenue Service (GRS). This shift creates considerable room for subjective assessments of the company’s Transfer Pricing case by the GRS, thereby increasing the risk of additional tax charges, penalties, and late payment interest.

It is strongly recommended that companies prepare Transfer Pricing documentation annually and keep it ready for submission.

For further information about transfer pricing law in Georgia, you can read our article HERE.

Tbilisi Accounting/conculting Firm Specializing in taxation and Transfer Pricing Services in Georgia

As mentioned earlier, we possess specialized knowledge in Transfer Pricing and are one of the very few local Georgian accounting/consulting firms recognized as experts in this field. Our primary focus is on Taxation, with a particular emphasis on Transfer Pricing. In fact, the name of our firm, TPsolution (Transfer Pricing Solution), reflects our commitment to this area of expertise.

Unlike firms that primarily rely on advertising and sales skills for success, we are a dedicated group of professional practitioners in Taxation, Transfer Pricing and accounting. Our achievements stem from our high level of competence, expertise, and unwavering dedication to our work.

For high-quality Transfer Pricing services, feel free to reach out to us at info@tpsolution.ge or fill out the contact form HERE.

Professional Transfer Pricing services

Transfer Pricing Services in Georgia