A Georgian company can be part of an international business from its first invoice. Group charges, shareholder funding and overseas suppliers deserve the same attention as customer revenue.
Follow the payment before choosing the tax treatment
For each international payment, identify the payer, recipient, country, contractual purpose and work performed. A service fee, royalty, interest payment and dividend can have different Georgian tax consequences. The records should show the commercial reason for the payment and the calculation behind it.
We examine Georgian withholding, treaty relief, VAT and the company’s profit-tax treatment together. This is especially useful before the first recurring group charge or a significant payment abroad, when the contract and invoicing process can still be put in order.
Explain the price between related businesses
Georgian transfer pricing rules apply to relevant international controlled transactions. The central question is whether the conditions reflect what independent businesses would agree. Ownership links, control and certain low-tax jurisdictions are part of the initial review.
Start with the transaction itself: what was supplied, who carried out the work, which assets were used and who bore the commercial risk. That factual description supports the pricing method and any comparison with market transactions. A percentage applied to costs needs an explanation of both the cost base and the percentage.
Give shareholder loans the same attention
Record the amount, currency, maturity, interest, security and repayment expectations. Compare the agreement with what the borrower can realistically repay. Georgia’s transfer pricing instructions expressly address the circumstances in which a purported loan can be treated as capital.
A useful file includes the funding purpose, cash-flow forecast, approval and payment history. Review it when terms change or repayment is repeatedly postponed. An old contract should continue to describe the funding arrangement that actually exists.
Prepare treaty evidence before the payment
Identify the applicable treaty article, the recipient’s residence and the documents required for relief. Put the residence certificate and supporting information in the payment file. For a multinational group, align the Georgian analysis with the group’s wider transfer pricing records and explain any local differences.
Make the international-payment review repeatable
Prepare a register of recurring overseas payments, including services, software, royalties, interest and group charges. Identify the recipient, relationship, agreement, payment basis and expected annual amount. Review the Georgian withholding, treaty, VAT and company-tax questions from the actual transaction.
| Payment | Commercial evidence | Tax/pricing questions |
|---|---|---|
| Group services | Deliverables, benefit, allocation and cost records | Actual service, arm’s-length charge, withholding and VAT |
| Royalty or software rights | Rights granted, use, territory and ownership | Classification, treaty provision and pricing basis |
| Loan interest | Funding purpose, currency, maturity and ability to repay | Debt character, market terms and withholding |
| Goods | Product, quantities, delivery terms and functions | Comparable conditions and allocation of commercial risks |
| Shareholder dividend | Ownership, decision and amount | Recipient status, withholding and treaty documents |
Choose a pricing method from the transaction
A comparison should consider the functions performed, assets used and risks borne by each party. Where a cost-based method is appropriate, define the costs included and excluded and explain the basis for the mark-up. Where market prices or margins are used, explain why the comparables are relevant and which adjustments are needed.
Retain the intercompany agreement, factual analysis, calculation and supporting evidence together. The local records should agree with invoices and the Georgian company’s accounts. A group policy can provide the background, while the Georgian file explains how that policy was applied to the company’s own transactions.
Review financing when the facts change
A loan that is repeatedly extended or cannot realistically be repaid deserves a fresh analysis. The Georgian instructions address circumstances in which a purported loan can be treated as capital. Keep forecasts, approvals and repayment history current so the documented financing continues to describe the real arrangement.
Review your international payments
Send the ownership chart, a list of related-party payments and the key agreements. We can identify the Georgian tax questions and organise the analysis and supporting records.
Request a consultationFrequently asked questions
Which transactions should be included in an initial transfer pricing review?
Include cross-border services, loans, guarantees, royalties, goods and other dealings with related businesses, together with transactions involving relevant preferential-tax jurisdictions. The review begins with the actual parties and transaction terms.
What supports an overseas group service charge?
Keep the agreement, evidence of the work performed, the allocation calculation, invoices and payment records. These should explain the benefit to the Georgian company and how the amount was calculated.
Legal basis: Tax Code of Georgia, Articles 126–129; Ministry of Finance Order No. 423 and its transfer-pricing instructions.