Published by Bookkeeping.ge — Assio Lex and Associates LLC
Updated
International tax and business in Georgia
Transfer pricing in Georgia connects the prices within an international group with the work each business actually performs. Bookkeeping.ge helps foreign-owned companies organise related-party accounting, review cross-border charges and prepare for Georgia’s international controlled transaction reporting.
Discuss transfer pricing
Which transactions need a transfer pricing review?
Start with a map of the group: who owns the Georgian company, who controls its decisions and which overseas businesses it trades with. International controlled transactions can involve services, goods, financing or intellectual property. A small local team can have significant related-party dealings even when its third-party turnover is modest.
For the related-party test, ownership of more than 50% or actual control of business decisions is relevant, including common control. Transactions involving persons in preferential-tax jurisdictions can also be controlled transactions even without a related-party relationship. Include these counterparties in the initial screening.
Georgia applies the arm’s-length principle to covered international controlled transactions. The practical question is whether independent businesses would have agreed comparable terms in comparable circumstances. A signed group contract is a starting point; the services delivered, commercial responsibilities and accounting records also matter.
| Transaction | What to examine | Useful evidence |
|---|---|---|
| Management and shared services | What the Georgian business receives and how charges are allocated | Service descriptions, deliverables, allocation schedules and invoices |
| Shareholder and group loans | Funding terms, interest, currency, security and repayment arrangements | Loan agreements, repayment schedules and financing comparisons |
| Software, licences and royalties | Rights supplied, ownership and the activities behind the intellectual property | Licence agreements, development records and rights documentation |
| Goods and distribution | Commercial functions, stock responsibilities and margins | Supply contracts, customs records and segmented financial results |
| Development and support services | Who directs the work and bears the commercial risks | Project records, staff responsibilities and cost reconciliations |
New controlled transaction reporting in 2026
A February 2026 amendment introduced an annex for international controlled transactions, starting with the 2025 reporting year. The reporting threshold is an aggregate amount exceeding GEL 500,000. The calculation also brings in free-of-charge transactions and outstanding receivable and payable balances, so reviewing invoices alone can miss a reporting obligation.
The annex asks for information about counterparties and controlled dealings. Companies should connect the reported figures to the general ledger, group balances and underlying agreements. The GEL 500,000 annex threshold is a reporting trigger; it does not create a general exemption from transfer pricing rules below that amount.
| Profit-tax model | Where the annex belongs | First reporting deadline in 2026 |
|---|---|---|
| Distributed-profit model | March profit-tax declaration | 15 April 2026 |
| Annual profit-tax declaration | Annual profit-tax return | 1 April 2026 |
These first deadlines have already passed. A company reviewing its position in October 2026 should check the 2025 annex already filed, identify omissions and organise corrections where required. For the next reporting cycle, build the related-party register during the year rather than reconstructing it at filing time.
From group charges to a defensible pricing analysis
Understand the business
Describe what the Georgian company does, the assets it uses and the risks it manages. Compare this with the overseas counterparty’s role. A routine support operation and a business that owns valuable technology need different analyses, even if their invoices use the same description.
Select and support the method
Recognised methods include comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. The most appropriate method follows the transaction and available evidence. An unsupported standard markup is less useful than a documented explanation of the selected method and comparables.
Reconcile the financial information
Connect transaction totals, cost pools, allocation keys and margins to the accounting records. Separate unrelated income and exceptional items where the analysis requires it. Keep a record of adjustments so the group finance team and local accountant can reproduce the calculation.
Build a useful transfer pricing file
- A group ownership chart and a list of overseas related parties.
- Contracts, amendments, invoices and year-end receivable/payable confirmations.
- A description of services, goods, financing or rights actually provided.
- Functional analysis and the reason for choosing the pricing method.
- Comparable information, search assumptions and relevant financial calculations.
- A reconciliation between the analysis, local accounts and controlled transaction annex.
A group policy can supply valuable background. The local file still needs to explain the Georgian business and the figures reported here. Keep the working papers accessible to the people responsible for local tax reporting, rather than storing the only copy with an overseas parent.
Transfer pricing, withholding tax and treaty relief
These reviews answer different questions. Transfer pricing examines the terms between covered parties. Withholding tax examines a payment’s Georgian tax treatment. A double taxation treaty may limit taxing rights or offer relief. An arm’s-length charge can still require a withholding-tax review, and a treaty benefit does not replace pricing support.
Read our guides to payments abroad and withholding tax, double taxation treaties and permanent establishments when planning group transactions.
Transfer pricing support in Tbilisi
Bookkeeping.ge brings the accounting records and tax questions together. We can organise related-party transaction schedules, identify missing agreements, reconcile group balances and help prepare the information needed for the controlled transaction annex and a specialist pricing analysis.
For a new arrangement, speak with our team before the first intercompany invoice or loan drawdown. For an existing group, start with the latest financial statements, related-party ledger and agreements. Ongoing bookkeeping can feed this work through our accounting packages and fee calculator; a transfer pricing documentation project is available as a dedicated service.
Transfer pricing questions
Does a shareholder loan count as a related-party transaction?
It belongs in the initial review, including outstanding balances and financing terms. A loan with no current-year interest invoice can still be important to the analysis and the annex.
Is the annex the same as a transfer pricing report?
No. The annex reports controlled transaction information. A pricing report explains and supports the commercial terms and method. Keep the figures consistent across both.
Can we use our parent company’s documentation?
Use it as a foundation, then connect it to the Georgian entity’s activities, financial information and local reporting. Tell us which documentation already exists so the review builds on useful work.