Georgia – Transfer Pricing (2025)

Legal framework and scope

Georgia’s transfer pricing regime is grounded in the Tax Code of Georgia (GTC) and in administrative instructions issued by the Ministry of Finance and the Georgia Revenue Service (GRS). The arm’s length principle is explicitly established in Tax Code Article 127 (“General principles of transfer pricing”). Practical guidance is provided by Decree #423 of the Finance Minister of 18 December 2013, which implements Articles 126–1291 of the GTC. Where domestic law does not provide specific guidance on certain topics, Georgia relies on the 2017 OECD Transfer Pricing Guidelines as an explanatory instrument.

Arm’s length principle and role of the OECD Guidelines

The domestic framework makes direct reference to the arm’s length principle and the local transfer pricing instructions are based on the 2017 OECD Transfer Pricing Guidelines. The profile states that “The principles of the TP Instructions are based on the 2017 OECD Transfer Pricing Guidelines” and that if there is no difference between the GTC rules and the local TP instructions and the 2017 OECD Guidelines, then the OECD Guidelines shall be applied. Thus, the OECD Guidelines serve as a primary interpretative tool for issues not specifically addressed in Georgian law (Decree #423 of the Finance Minister, 18 December 2013).

Definition of related parties

Tax Code Article 126 (“Meaning of the concepts for the purposes of this Chapter”) provides the domestic definition of related parties. Two persons are related if one directly or indirectly participates in the management, control or capital of the other, or if the same persons directly or indirectly participate in the management, control or capital of both. “Direct or indirect participation” is defined as ownership of more than 50% (economic ownership) of an enterprise or the actual control of business decisions of an enterprise. This economic ownership threshold and the effective control test frame the scope of controlled transactions subject to transfer pricing scrutiny.

Methods and application criterion

Tax Code Article 128 lists the recognised transfer pricing methods: Comparable Uncontrolled Price (CUP), Resale Price, Cost Plus, Transactional Net Margin Method (TNMM) and Profit Split. The arm’s length price must be determined by “the method that best suits each particular transfer pricing instance,” which reflects the most appropriate method approach rather than a strict hierarchy. Decree #423 (and the Guidance on the application of Articles 126–1291) permits application of “other methods” where none of the approved methods can reasonably be applied and where the other method yields results consistent with those that independent enterprises would achieve. The taxpayer bears the burden of proof to demonstrate that these conditions are met (Decree #423, Article 8(6) and guidance paragraphs 4.44–4.46), and the GRS considers the use of other methods to be exceptional.

Comparability and ranges

Georgia follows the OECD guidance on comparability analysis as set out in Chapter III of the OECD Transfer Pricing Guidelines. There is no domestic preference for local comparables; foreign comparables are accepted provided the taxpayer analyses the impact of geographic differences and other factors on the financial indicator under review and makes appropriate comparability adjustments in accordance with Article 6 of the Instructions (Decree #423, Article 7). Article 10 of Decree #423 defines the “market range” as a range of relevant financial indicator figures generated by applying the most appropriate method to a set of comparable uncontrolled transactions. The market range can be determined either with reference to all comparable transactions when information is sufficiently complete to identify and quantify all material differences, or with reference to the interquartile range when comparables do not meet those conditions. A controlled transaction will not be adjusted where the relevant financial indicator is within the market range. If the indicator falls outside the market range, the Revenue Service may adjust the taxable profits under Article 127(3) of the GTC and such adjustment is to the median of the market range unless facts and circumstances clearly support adjustment to a different point within the market range. The burden of proof for showing that a different point is appropriate lies with the Georgian enterprise when the enterprise asserts it, and with the Revenue Service when the Revenue Service asserts it (Decree #423, Article 10(1)–(4)).

Comparability adjustments

Comparability adjustments are required under domestic law in situations where, during the comparison process, material differences are identified that have a definite and reasonably ascertainable effect on the relevant financial indicator. In such cases, appropriate adjustments must be made to eliminate the effect of each such difference (Decree #423, Article 10(1)(a)). The rules follow OECD guidance in terms of the identification and quantification of adjustments.

Documentation and reporting

Georgia requires transfer pricing documentation and, in particular, Country-by-Country (CbC) reporting. Tax Code Article 701 sets out the CbC obligations: the Ultimate Parent Entity resident in Georgia must file a Country-by-Country Report with the Georgian tax administration no later than 31 December of the year following the Reporting Fiscal Year of the MNE Group. A Constituent Entity resident in Georgia must notify the Tax Administration whether it is the Ultimate Parent Entity or the Surrogate Parent Entity no later than the last day of the Reporting Fiscal Year. The CbC exclusion threshold is a consolidated group revenue of less than EUR 750 million in the fiscal year immediately preceding the Reporting Fiscal Year (Article 701(3)(b)). The Minister of Finance will define filing rules.

Per Decree #423 (Article 17), a written request by the Revenue Service seeking an explanation as to why a taxpayer’s profit is consistent with the arm’s length principle will be satisfied where the Georgian enterprise has prepared transfer pricing documentation in accordance with Article 17 and provides that documentation to the Revenue Service within 30 calendar days of receipt of the written request. Documentation may be submitted in Georgian or English; however, at the request of the Revenue Service, translation of English documents into Georgian is required at the expense of the Georgian enterprise. The profile does not describe domestic mandatory Master file or Local file requirements consistent with Annexes I and II of the OECD Guidelines; the explicit statutory CbC requirement is contained in Article 701 and the Article 17 obligation concerns provision of documentation upon request.

Penalties and compliance

Tax Code Article 2791 provides a penalty for failure to submit the Country-by-Country Report on time or for submission of an incomplete or incorrect report. The fine amount is GEL 5 000 (approximately EUR 1 400). The procedural deadlines described above (CbC by 31 December of the year following the Reporting Fiscal Year; documentation within 30 calendar days of written request) are therefore backed by monetary sanctions for CbC non-compliance.

Safe harbours and simplification measures

Georgia does not have statutory safe harbours for specific industries, taxpayer types or transaction types. In practice, a simplified approach is used for low value-adding intra-group services consistent with the OECD principles, but there is no specific domestic legislation codifying a low value-adding services safe harbour.

APAs and MAPs; procedures and timing

Georgia permits advance pricing agreements. The Head of the Revenue Service is authorized to enter into an advance pricing agreement with a taxpayer in relation to internationally controlled operations. Decree #45 of the Ministry of Finance, dated 2 March 2021, amended Georgian transfer pricing rules concerning unilateral APAs: the coverage period for a unilateral APA shall not exceed three years, no rollback is allowed, the application fee is GEL 30 000, and taxpayers may apply for a unilateral APA regardless of the value of the expected controlled transactions. Decree #423 includes as appendices the application forms: pre-APA meeting request, APA request form, the APA form itself, and the form for determining consistency of the enterprise’s transfer pricing policy with the APA. Georgia also offers Mutual Agreement Procedures (MAP) as a dispute prevention and resolution mechanism.

Other considerations: year‑end and secondary adjustments, PEs

There is no mandatory requirement to make year-end adjustments, although they may be accepted if they contribute to achieving an arm’s length result. According to the profile, Georgia does not make secondary adjustments. Regarding profit attribution to permanent establishments (PEs), Georgian legislation and tax treaties do not explicitly incorporate the Authorised OECD Approach (AOA) — treaties are based on the earlier version of Article 7 — but in practice the Revenue Service and taxpayers apply the AOA for PE profit attribution.

Conclusion

Georgia’s transfer pricing framework is anchored in the Tax Code (notably Articles 126, 127, 128, 701 and 2791) and implemented through administrative Decree #423 and subsequent updates such as Decree #45 for APAs. The system adopts the OECD 2017 Guidelines as the principal interpretative instrument where domestic rules are silent or consistent with OECD positions. The domestic approach prioritises selection of the most appropriate method, accepts foreign comparables with required adjustments, uses market ranges with median-based adjustment rules, mandates CbC reporting with clear thresholds and deadlines, requires documentation to be furnished on request within 30 calendar days, and offers unilateral APA procedures (maximum three-year coverage, no rollback, GEL 30 000 fee) and MAPs for dispute resolution.

References

Information summarized from the Georgia transfer pricing country profile and the cited domestic provisions. For comparative country profiles and source material, see https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html