Transfer pricing
Evaluation of international controlled operations
Transfer pricing is the valuation of the same internationally controlled operations. Controlled operations include financial and commercial operations carried out between a Georgian enterprise and its dependent non-resident enterprise, or even between a Georgian enterprise and a resident of a country with preferential taxation, even if there is no mutual dependence between them. Tax legislation requires that controlled transactions for tax purposes be valued in accordance with market principles.
International controlled operations
According to Articles 126-1291 of the Tax Code of Georgia and the order of the Minister of Finance of Georgia N423_"On approving the instruction on the evaluation of international controlled operations", the methods of evaluation of international controlled operations, the rules of their use and other procedural issues are regulated. However, in addition to a thorough knowledge of the mentioned records of the law, for the correct application of the principles of transfer pricing, it is necessary to have audit experience, knowledge of established approaches at the tax and international level, since the correctness of the chosen transfer pricing methods and their use is partly a matter of subjective assessment and depends on the qualifications of this or that professional and the firmness of the approaches mentioned by him. on the ability to reason.
A company that has controlled operations is obliged to submit to the tax authority within 30 days of its request documentation related to the assessment of operations, which provides an explanation of the basis on which the enterprise considers that its profit is in accordance with the market principle. Since it is practically impossible to prepare the mentioned document in 30 days, the company should have it developed and prepared in advance. Submission of documentation related to the assessment is not a guarantee that the tax authority will not charge additional tax, if the documentation is not prepared in strict compliance with all norms. That is why it is very important that the documentation is prepared by highly qualified professionals who have a lot of experience and special data in this direction. We can prepare transfer pricing documentation for your company, as well as ensure that the Revenue Service is convinced of the correctness of the principles we have chosen, if necessary, we will get involved in the tax dispute process.
It will be written in the transfer pricing document prepared by us
- Overview of the company's business operations and description of the organizational structure;
- selected operation description and functional analysis;
- A description of the evaluation method and an explanation of why this method was selected;
- An explanation of any economic analysis and forecast on which it was based
- used in the development of the operation evaluation methodology;
- conclusion on compliance with the market principle;
- any other information that may materially affect the determination of the Company's compliance with the market principle in relation to the controlled operations;
- Risk analysis.
We offer support throughout the entire preliminary agreement process, which includes:
- Before sending the preliminary agreement application, establishing pricing principles;
- preparation of transfer pricing documentation;
- submission of the prepared documentation to the Revenue Service in the appropriate form;
- Defending your company's position in online and/or in-person meetings during pre-deal development.
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