Worldwide transfer pricing reference guide 2014

Georgia (continued)
Documentation requirements
The transfer pricing documentation does not have any predefined format; rather it should contain the following types of information:
• Overview of the business operations of the Georgian enterprise
• Analysis of the economic factors affecting the prices
• Organizational structure
• Description of the controlled transactions
• Analysis of the comparability factors
• Details of the group’s transfer pricing policy
• Transfer pricing method applied and reasons for selection of a particular method
• Comparability analysis
• Details of advance pricing agreements relevant to the controlled transaction (if any)
• Conclusion on compliance with the arm’s length principle, and, where relevant, on adjustments made by the Georgian enterprise to its
transfer prices/taxable income
• Other information that may have a material effect with regard to the compliance of the arm’s length principle
Documentation deadlines
The transfer pricing documentation must be complete by the date the taxpayer files its corporate tax return. Upon request by the tax
authority, the documentation has to be submitted within 30 days of the request.
Statute of limitations on transfer pricing assessments
There is no specific statute of limitations on transfer pricing assessments. The general statute of limitation in Georgia is six years. It
is automatically extended to 11 years when a taxpayer chooses a 10-year carryforward of losses. Tax cannot be reassessed after this
period has elapsed.
Return disclosures/related party disclosures
Disclosure of transactions with related parties and also other types of third-party transactions which would remain subject to transfer
pricing control (e.g., transactions with parties located in low-tax jurisdictions) will be required during the filing of corporate income tax
return.
Transfer pricing-specific returns
Not applicable.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
In general, the likelihood of an annual tax audit is characterized as high, as is the likelihood that transfer pricing will be reviewed as part
of an audit. The likelihood that the transfer pricing methodology will be challenged during the course of an audit is currently unknown, as
the instruction regulating transfer pricing inspection will only be effective from 1 January 2014.
APA opportunity
Unilateral APA (between resident taxpayer and the RS) is available only for transactions which separately or in aggregate exceed
GEL50,000,000. In principle, the agreed-upon method is binding throughout the APA term, which is three years, with the possibility of
extension.
The law also introduces the possibility to conclude multilateral APAs where the transactional counter-parties are located in a jurisdiction
with which Georgia has a double tax treaty. However, due to the fact that there are no special regulations in this regard yet, it is
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