A case study by the OECD and UNDP published on 27 November 2020 focuses on capacity building work undertaken with the Georgian tax administration through the Tax Inspectors Without Borders (TIWB) initiative. The study notes that the practical approach has improved the skills of tax auditors and has increased confidence in dealing with complex transfer pricing audit cases.

Georgia is a member of the Global Forum on Transparency and Exchange of Information for Tax Purposes and of the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS).

Human Resource Development

The study notes that the TIWB programmes have improved the ability of tax auditors in Georgia to conduct high quality tax audits. The hands-on, practical approach of TIWB support has improved auditors’ skills and confidence in managing complex transfer pricing audit cases. There has been progress in the ability of the tax administration to select taxpayers for audit and carry out the audits. The whole audit process has been improved, including pre-audit assessment, documentary research, analysing taxpayer information and carrying out field audits.

Risk assessment skills and knowledge of international tax topics has improved. The study notes that knowledge and expertise have improved in relation to transfer pricing methods; related party transactions involving intangibles, services and financial products; valuation techniques; and permanent establishment issues. Tax auditors have also increased their knowledge of the banking and oil and gas sectors.

Organisational Development

The study notes that as a result of the TIWB programmes there have been organisational changes in Georgia resulting in improved service delivery and communication with taxpayers. International best practices and experiences have been brought into the tax administration to improve taxpayer services.

Impact on Tax Compliance

The tax administration has seen an improvement in tax compliance following the increase in quality of tax audits. Taxpayers are paying more attention to the completeness of the information included in tax returns.

Conclusions

The study concludes that the TIWB provided technical assistance and expertise that supported the tax administration in increasing tax revenue generated through audits; bringing enhanced skills to audits; and enabling improved tax compliance from multinational enterprises operating in Georgia. Efficiency was increased by teamwork and knowledge sharing between the newest and most experienced auditors within the tax administration and transfer pricing knowledge was distributed to all sections of the tax audit chain.