Global forum on transparency and exchange of information for tax purposes peer reviews. Georgia 2014 : phase 1 : legal and regulatory framework.

85 Pages·2014·1.567 MB·English

by  OECD

Global Forum on Transparency and Exchange of Information GLOBAL FORUM ON TRANSPARENCY AND EXCHANGE
for Tax Purposes
OF INFORMATION FOR TAX PURPOSES
PEER REVIEWS, PHASE 1: GEORGIA
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the
multilateral framework within which work in the area of tax transparency and exchange of
information is carried out by over 120 jurisdictions which participate in the work of the Global Peer Review Report
Forum on an equal footing.
Phase 1
The Global Forum is charged with in-depth monitoring and peer review of the implementation
of the standards of transparency and exchange of information for tax purposes. These
standards are primarily refl ected in the 2002 OECD Model Agreement on Exchange of Legal and Regulatory Framework
Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax
Convention on Income and on Capital and its commentary as updated in 2004, which has
been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant GEORGIA
information for the administration or enforcement of the domestic tax laws of a requesting
party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must
be provided, including bank information and information held by fi duciaries, regardless of the
existence of a domestic tax interest or the application of a dual criminality standard.
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All members of the Global Forum, as well as jurisdictions identifi ed by the Global Forum as e
relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 r R
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reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange vie
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The ultimate goal is to help jurisdictions to effectively implement the international standards r
of transparency and exchange of information for tax purposes. t Ph
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All review reports are published once approved by the Global Forum and they thus represent e
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agreed Global Forum reports. L
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For more information on the work of the Global Forum on Transparency and Exchange of a
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Information for Tax Purposes, and for copies of the published review reports, please visit n
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Consult this publication on line at http://dx.doi.org/10.1787/9789264217430-en. G
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This work is published on the OECD iLibrary, which gathers all OECD books, periodicals and O
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Visit www.oecd-ilibrary.org for more information.
ISBN 978-92-64-21742-3
9HSTCQE*cbhecd+
23 2014 14 1 P
Global Forum
on Transparency
and Exchange
of Information for Tax
Purposes Peer Reviews:
Georgia 2014
PHASE 1: LEGAL AND REGULATORY FRAMEWORK
August 2014
(reflecting the legal and regulatory framework
as at May 2014)
ThisworkispublishedontheresponsibilityoftheSecretary-GeneraloftheOECD.
Theopinionsexpressedandargumentsemployedhereindonotnecessarilyreflect
theofficialviewsoftheOECDorofthegovernmentsofitsmembercountriesor
thoseoftheGlobalForumonTransparencyandExchangeofInformationforTax
Purposes.
Thisdocumentandanymapincludedhereinarewithoutprejudicetothestatusof
orsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersand
boundariesandtothenameofanyterritory,cityorarea.
Pleasecitethispublicationas:
OECD(2014),GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeer
Reviews:Georgia2014:Phase1:LegalandRegulatoryFramework,OECDPublishing.
http://dx.doi.org/10.1787/9789264217430-en
ISBN978-92-64-21742-3(print)
ISBN978-92-64-21743-0(PDF)
Series:GlobalForumonTransparencyandExchangeofInformationforTaxPurposesPeerReviews
ISSN2219-4681(print)
ISSN2219-469X(online)
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TABLE OF CONTENTS – 3
Table of Contents
About the Global Forum                                             5
Executive Summary                                                 7
Introduction                                                       11
Information and methodology used for the peer review of Georgia           11
Overview of Georgia                                               12
Compliance with the Standards                                       19
A. Availability of Information                                        19
Overview                                                        19
A1 Ownership and identity information                               21
A2 Accounting records                                            39
A3 Banking information                                           44
B. Access to Information                                            47
Overview                                                        47
B1 Competent Authority’s ability to obtain and provide information        48
B2 Notification requirements and rights and safeguards                  57
C. Exchanging Information                                          59
Overview                                                        59
C1 Exchange of information mechanisms                              60
C2 Exchange of information mechanisms with all relevant partners         66
C3 Confidentiality                                                67
C4 Rights and safeguards of taxpayers and third parties                  68
C5 Timeliness of responses to requests for information                   70
Summary of Determinations and Factors Underlying Recommendations    71
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014
4 – TABLE OF CONTENTS
Annex 1: Jurisdiction’s response to the review report                    75
Annex 2: List of exchange of information mechanisms                    76
Annex 3: List of all laws, regulations and other relevant material          81
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014
ABOUT THE GLOBAL FORUM – 5
About the Global Forum
The Global Forum on Transparency and Exchange of Information for
Tax Purposes is the multilateral framework within which work in the area
of tax transparency and exchange of information is carried out by over
120 jurisdictions, which participate in the Global Forum on an equal footing
The Global Forum is charged with in-depth monitoring and peer
review of the implementation of the international standards of transpar-
ency and exchange of information for tax purposes These standards are
primarily reflected in the 2002 OECD Model Agreement on Exchange of
Information on Tax Matters and its commentary, and in Article 26 of the
OECD Model Tax Convention on Income and on Capital and its commen-
tary as updated in 2004 The standards have also been incorporated into
the UN Model Tax Convention
The standards provide for international exchange on request of fore-
seeably relevant information for the administration or enforcement of the
domestic tax laws of a requesting party Fishing expeditions are not authorised
but all foreseeably relevant information must be provided, including bank
information and information held by fiduciaries, regardless of the existence
of a domestic tax interest or the application of a dual criminality standard
All members of the Global Forum, as well as jurisdictions identified by
the Global Forum as relevant to its work, are being reviewed This process is
undertaken in two phases Phase 1 reviews assess the quality of a jurisdic-
tion’s legal and regulatory framework for the exchange of information, while
Phase 2 reviews look at the practical implementation of that framework Some
Global Forum members are undergoing combined – Phase 1 and Phase 2 –
reviews The Global Forum has also put in place a process for supplementary
reports to follow-up on recommendations, as well as for the ongoing monitor-
ing of jurisdictions following the conclusion of a review The ultimate goal is
to help jurisdictions to effectively implement the international standards of
transparency and exchange of information for tax purposes
All review reports are published once approved by the Global Forum
and they thus represent agreed Global Forum reports
For more information on the work of the Global Forum on Transparency
and Exchange of Information for Tax Purposes, and for copies of the pub-
lished review reports, please refer to wwwoecdorg/tax/transparency and
wwweoi-taxorg
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014

ExECUTIVE SUMMARY – 7
Executive Summary
1 This report summarises the legal and regulatory framework for trans-
parency and exchange of information in Georgia The international standard
which is set out in the Global Forum’s Terms of Reference to Monitor and
Review Progress Towards Transparency and Exchange of Information, is
concerned with the availability of relevant information within a jurisdiction,
the competent authority’s ability to gain access to that information, and in
turn, whether that information can be effectively exchanged on a timely basis
with its exchange of information partners
2 Georgia is an independent country with a territory of approximately
69 000 square kilometres and a population of around 45 million located in
the Caucasus, at the crossroad between Europe and Asia Georgia’s economy
has grown steadily in the past three years (65% growth on average) with its
gross domestic product reaching USD 1583 billion in 2012 Georgia joined
the Global Forum on Transparency and Exchange of Information for Tax
Purposes in 2011
3 Relevant entities that can be formed in Georgia include: limited-lia-
bility companies, joint-stock companies, co-operatives, general partnerships,
limited partnerships, and civil law partnerships Georgian legislation does not
provide for the establishment of foundations The availability of ownership
information in respect of relevant entities is ensured either with the public
authorities or with the entity itself The tax authorities have full ownership
information of any type of partnership carrying on business in Georgia
through registration and/or reporting requirements Full ownership informa-
tion on limited-liability companies, co-operatives, and limited partnerships
is available with both the tax authorities and the commercial registry
Ownership information of joint-stock companies is ensured at the level of
the entity Companies incorporated in a foreign jurisdiction with sufficient
nexus to Georgia have to register with the NAPR and the tax authorities when
establishing a branch in Georgia, however, they are not required to maintain
or provide to these authorities information on the owners in all cases, and
a recommendation is made in this respect Nominees must be obligated
institutions under anti-money laundering legislation and would maintain
information on the person for whom they hold shares
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014
8 – ExECUTIVE SUMMARY
4 Even though the concept of a trust is not recognised in Georgia,
residents may act as a trustee or trust administrator of a foreign trust, and
Georgian legislation does not require the keeping or furnishing of identity
information in respect of the trust Georgia should ensure the availability of
information identifying the settlors and beneficiaries of foreign trusts which
are administered or in respect of which a trustee is resident in Georgia A
trust-like arrangement exists under the laws of Georgia, namely “entrusted
property” Identity information in respect of this trust-like arrangement is
available in the contract required to be signed by the parties and with the tax
administration where tax liabilities arise
5 A general obligation to keep accounting records for six years is in
place for all relevant entities and arrangements pursuant to tax obligations
and specific accounting legislation
6 Full banking information is available through a combination of com-
mercial legislation and AML legislation Anonymous accounts are explicitly
prohibited
7 The authority competent to collect information and reply to an
exchange of information (EOI) request is the Department for Administration
of the Revenue Service, within the Ministry of Finance The Revenue Service
in many circumstances already possesses information relevant to EOI pur-
poses In that case, it is readily accessible to the competent authority
8 When the information is sought from persons, the competent author-
ity is vested with the powers to obtain information directly from taxpayers
and/or to perform audit in respect of any person These access powers are
enforced through penalties The access powers under Georgia’s tax law can
be used for the purposes of giving effect to an international agreement
9 Secrecy provisions in the law do not generally hinder the exchange of
information in respect of information held by the authorities and accountants
With regard to banking secrecy, however, the lack of an explicit exception in
the banking law for disclosure to the tax authorities leaves some uncertainty
in the application of the laws that may prevent effective exchange of infor-
mation The scope of professional secrecy attaching to advocates is broader
than that established in the international standard of exchange of informa-
tion Georgia should ensure that secrecy provisions are consistent with the
standard and do not hinder effective exchange of information The rights and
safeguards that apply to persons in Georgia are compatible with effective
exchange of information
10 Georgia’s network of EOI mechanisms covers 90 jurisdictions
through 49 bilateral DTCs and the Convention on Mutual Administrative
Assistance in Tax Matters, which entered into force in respect of Georgia
since 1 June 2011 Each of Georgia’s EOI relationships contains sufficient
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014
ExECUTIVE SUMMARY – 9
provisions to enable Georgia to exchange all relevant information Georgia’s
network of exchange agreements covers all its main trading partners Each of
Georgia’s EOI agreements contains confidentiality provisions that meet the
international standard and its domestic legislation also contains appropriate
confidentiality provisions and enforcement measures Where domestic law
provisions on general confidentiality rules are less restrictive than those
provided under the EOI agreements concluded by Georgia, the provisions of
the international agreements will prevail ensuring that the standard is met
Georgia’s EOI agreements protect rights and safeguards in accordance with
the standard, although the scope of attorney-client privilege found in domes-
tic legislation is wider than the international standard
11 Georgia’s response to the recommendations in this report, as well
as the application of the legal framework to the practices of its competent
authority will be considered in detail in the Phase 2 Peer Review of Georgia
which is scheduled for the second half of 2014
PEER REVIEW REPORT – PHASE 1: LEGAL AND REGULATORY FRAMEWORK – GEORGIA © OECD 2014