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 BEPS project's main goal is to develop effective domestic and international instruments to tackle aggressive and harmful tax practices.
Detailed information on the BEPS action may be found here:
http://www.oecd.org/tax/beps/beps-actions.htm
In February 2016 the OECD and G-20 established BEPS Inclusive Framework, which supervises the application and implementation of BEPS package. In particular, the 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 joined the BEPS Inclusive Framework as an associate member. On July 1, 2016, the membership of the Steering Group under Inclusive Framework (IF) was confirmed, in which Georgia was elected as a member-jurisdiction of the Steering Group. Starting in 2024, Georgia became re-elected member of the Steering Group for a two-year term.
Georgia, as an associate member of the BEPS Inclusive Framework, is committed to implement BEPS 4 minimum standards, in particular:
- Action 5 - Harmful Tax Practices
Action 5 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 reviewed the preferential tax regimes existing in Georgia. The assessment of preferential tax regimes in Georgia is conducted as part of annual monitoring. According to the assessment, the preferential tax regimes are found to be in compliance with OECD standards (no recommendations).
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.
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 introduced a mechanism for the compulsory spontaneous 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 the BEPS Action 15 ad-hoc group and was approved in December 2016. Georgia was engaged in works of ad-hoc group from the onset.
Since 2018, BEPS Working Party 1 has been performing annual monitoring of 104 MLI signatory jurisdictions, including Georgia, to evaluate the implementation of the Action 6 minimum standard of the Multilateral Tax Convention. As a result of this assessment, Georgia was recognized as having implemented the BEPS Action 6 minimum standard.
In 2020, Georgia was elected by the OECD Inclusive Framework for a three-year term as Chair of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (BEPS MLI). In 2023, Georgia was re-elected as BEPS MLI Chair and will continue to lead the conference until 2026.
- Action 13 - Transfer Pricing Documentation and Country-by-Country Reporting
Action 13 outlines the implementation of Country-by-Country Reporting (CbCR).
On June 30, 2016, during the BEPS Inclusive Framework meeting, Georgia signed the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbCR). On June 4, 2024, for the purposes of CbCR, the Minister of Finance issued an Order approving the “Reporting Rule for Multinational Enterprises Group,” which establishes updated reporting standards for multinational enterprise groups operating in Georgia, in line with international recommendations.
- 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 Action 14 is carried out by the FTA MAP Forum.
Since 2017, Georgia has been actively involved in the work of the FTA MAP Forum and has been elected as a member of the FTA MAP Forum Steering Group. Since 2023, Georgia represents an elected member of the OECD and MAP Forum Steering Group, along with 13 other members of the OECD Inclusive Framework.