Georgia Transfer Pricing Country Profile (December 2021).pdf

Arm’s Length Principle:
- Georgia's domestic legislation and regulations, specifically the Tax Code (Article 127), reference and adhere to the Arm’s Length Principle for transfer pricing.

OECD Transfer Pricing Guidelines:
- The principles of the Georgian Transfer Pricing (TP) Instructions are based on the 2017 OECD Transfer Pricing Guidelines.
- Domestic law and regulations align with these guidelines, applying them when domestic rules are similar or in cases where specific guidance is lacking.

Related Parties:
- Related parties are defined as entities meeting one of two criteria:
1. Direct or indirect participation in management, control, or capital (over 50%).
2. Actual control over business decisions.

Transfer Pricing Methods:
- Georgia's Tax Code (Article 128) recognizes several transfer pricing methods, including: Cost Plus, Resale Price, Cup, TNMM, Profit Split, and Other (with conditions).
- The "Other" method can be used if neither the approved methods nor a specific alternative are suitable, ensuring consistency with independent enterprises.

Application of Transfer Pricing Methods:
- The most appropriate method is chosen for each transfer pricing instance.
- For commodity transactions, Georgia follows the OECD TP Guidelines (Chapter III) without specific domestic guidance.

Comparability Analysis:
- Georgian tax administration fully aligns with the comparability analysis guidance in Chapter III of the OECD TP Guidelines.
- Foreign comparables are acceptable, considering geographic differences and making comparability adjustments as needed.

Arm’s Length Range/Statistical Measure:
- Georgia's Tax Code (Article 10) allows for the use of a market range and statistical measures to determine arm’s length remuneration, particularly when using specific transfer pricing methods.