Base Erosion and Profit Shifting (BEPS) project
In 2013 in response to the call of the G 20 Leaders, the OECD initiated the Base Erosion and Profit Shifting (BEPS) Project, consisting of 15 actions. The main goal of the BEPS project is the development of the effective domestic and international instruments, to tackle aggressive and harmful tax practices.
Detailed information of the BEPS action may be found here:
http://www.oecd.org/tax/beps/beps-actions.htm
In February 2016 the OECD and G-20 has established BEPS Inclusive Framework, which supervises the application and implementation of BEPS package. In particular, implementation of BEPS minimum standards:
Inclusive Framework members on an equal footing participate in works related to drafting, implementation and further monitoring of BEPS measures.
Georgia and the BEPS project
On June 14, 2016 Georgia became an associate member of BEPS Inclusive Framework, while on July 1, 2016 during the first meeting of the Inclusive Framework in Kyoto, Japan, Georgia was elected the member of its supervisory body- the Steering Group.
Detailed information on members of the Steering Group may be found here
http://www.oecd.org/tax/beps/steering-group-of-the-inclusive-framework-on-beps.pdf
Georgia as an Inclusive Framework associate member committed to implement BEPS 4 minimum standards, in particular:
- Action 5 – Harmful Tax Practices
relates to preferential tax regimes, where a peer review is undertaken to identify features of such regimes that can facilitate base erosion and profit shifting and includes a commitment to transparency through the compulsory spontaneous exchange of relevant information on taxpayer-specific rulings.
The implementation of the minimum standard of the Action 5 is coordinated by the FHTP – Forum on Harmful Tax Practices, the purpose of which is the assessment and monitoring standards developed under the Action 5. In 2017 the forum has reviewed the preferential tax regimes existing in Georgia.
Since November 2016, Georgia has participated in the work of the Forum on Harmful Tax Practices (FHTP). Since March 2017 Georgia has been elected as a Member of the FHTP Bureau, and since May 2018 Georgia is a member of the Focus Group (FORC).
In order to fulfill the obligations arising from the joining Georgia to the Base Erosion and Profit Shifting (BEPS) Inclusive Platform, in 2018 the Ministry of Finance has introduced a mechanism for the compulsory spontaneous exchange of information related to harmful tax practices
The Ministry of Finance is responsible for the compulsory exchange of information related to harmful tax practices.
- Action 6 – prevention of treaty abuse
Action 6 was devised to prevent abusive application of tax treaties.
For the purposes of implementation of Action 6 minimum standards, on June 7, 2017 Georgia signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).
Multilateral Instrument was elaborated within the mandate of BEPS Action 15 ad-hoc group and was approved in December 2016. Georgia was engaged in works of ad-hoc group from the onset.
For the purposes of monitoring of implementation and application of BEPS Action 6 minimum standard, in May 2018 BEPS working party 1 initiated a peer review of 116 MLI signatories , among them Georgia. These reviews will be held on annual basis where jurisdictions are assessed against compliance with standards under Action 6.
- Action 13 - - Transfer Pricing Documentation and Country-by-Country Reporting
Action 13 provides for the implementation of the Country-by-Country Reporting.
To this end, on 30 June 2016 in the framework of the first meeting of the Inclusive Framework on BEPS Georgia signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country (CbC) Reports.
- Action 14 - - Making Dispute Resolution More Effective
The aim of the Action 14 is the timely and effective resolution of the tax treaty related disputes.
The coordination of the implementation process of the minimum standard developed in the framework of the action 14 is carried out by the FTA MAP Forum. .
Since 2017, Georgia is actively involved in the work of the FTA MAP Forum. In addition, since that period Georgia was elected as a member of the FTA MAP Forum Steering Group.
The Peer Review of Georgia on the implementation of the Action 14 is scheduled for 2020.