Small Business Status in Georgia
Small Business Status is a special tax regime for an Individual Entrepreneur: qualifying turnover is taxed at 1% instead of the ordinary rates, rising to 3% above GEL 500,000 a year. Registering the IE and obtaining the status are two separate steps โ the Revenue Service issues the certificate, normally within 2 working days, and it never expires.
Who qualifies
The status is granted to a natural person who carries out entrepreneurial activity independently and is registered with the Revenue Service as an Individual Entrepreneur. A company cannot hold it.
Being registered for VAT does not prevent you from obtaining or keeping the status. What does disqualify you is carrying out one of the prohibited activities โ in that case the Revenue Service may refuse the application or revoke the status later.
How to activate the status
Registering an Individual Entrepreneur does not grant the status automatically. There are three steps:
| Step | What happens | Where |
|---|---|---|
| 1 | Register as an Individual Entrepreneur | Public Service Hall |
| 2 | File the application for Small Business Status | Revenue Service (rs.ge) |
| 3 | Receive the certificate โ normally within 2 working days | Revenue Service |
The status takes effect from the date recorded on the certificate. There is no expiry date and no renewal โ it stays valid until cancelled. If you already hold Micro Business Status, the same application swaps it for Small Business Status.
The tax rate
The rate applies to turnover, not to profit โ expenses do not reduce it.
| Annual income from economic activity | Rate |
|---|---|
| Up to GEL 500,000 โ general rule | 1% |
| Over GEL 500,000 โ general rule | 3% |
| Up to GEL 700,000 โ wine tourism / agritourism | 1% |
| Over GEL 700,000 โ wine tourism / agritourism | 3% |
The higher rate is not retroactive. The 3% rate starts from the beginning of the month in which you cross the threshold and runs to the end of that calendar year โ the earlier months stay at 1%.
Which income is taxed under the regime
The regime covers qualifying income from economic activity. You can hold the status and still have other income taxed under the ordinary rules โ salary is never covered by the regime.
These categories always fall outside the 1% regime:
- Rent from immovable property
- Interest on loans you granted
- Dividends and royalties
- Gambling profits
- Gifts and inherited property
- Gains on the sale of property, vehicles, securities or a partnerโs share
- Income from forgiven debt
- Certain construction services supplied to businesses
Prohibited activities
The status cannot be granted at all for the following activities:
- Activities that require a licence or permit (with a narrow taxi-permit exception)
- Medical, architectural, legal advocacy and notarial, auditing and consulting activities โ including tax consulting
- Currency exchange operations
- Gambling business
- Provision of personnel (staffing)
- Production of excisable goods and activities requiring significant investment
The consulting entry catches most people out. Whether advisory or professional work counts as prohibited consulting depends on its legal classification, not on the wording of a contract or invoice. If in doubt, confirm the classification with the Revenue Service or a tax adviser before applying.
Accounting and declarations
The regime simplifies compliance, but it does not remove it. Holders must:
- keep the Small Business expense journal prescribed by the Revenue Service;
- file a monthly declaration by the 15th of the following month and pay the tax on the same date;
- use a cash register and issue waybills where the law requires it;
- retain tax and accounting documents for 3 years.
There are no advance income tax payments under the regime. If you also receive income taxed under the ordinary rules, an annual income tax declaration by 1 April may be required as well.
VAT and hiring people
The status does not exempt you from VAT. Registration becomes mandatory once turnover passes GEL 100,000 in any continuous 12 months, after which the ordinary VAT rules apply. On registration you may claim input VAT on stock held at that date, if you hold the required documents.
You may hire people โ the regime does not prohibit it. As a rule you then withhold 20% income tax at source and report it monthly. A narrow relief exists: remuneration up to GEL 6,000 per calendar year is not subject to withholding if you registered the IE and obtained the status in that same year, or if your total income in the previous year was under GEL 50,000.
When the status is cancelled
| Reason | Effective from |
|---|---|
| Income above the threshold in two consecutive calendar years | From the start of the next year |
| A prohibited activity was carried out | Retroactively, from the start of that year |
| Fined three times in one year over cash-register rules | Retroactively, from the start of that year |
| You apply to cancel it yourself | From the 1st of the following month |
| The Individual Entrepreneur registration is cancelled | On cancellation |
The date matters: voluntary cancellation takes effect from the first day of the following month, while cancellation for a prohibited activity or repeated cash-register fines applies retroactively from the start of that calendar year.
Cancellation is not permanent โ you may apply again if you meet the conditions, and a new certificate is issued with a new registration number.
Frequently asked questions
On qualifying turnover, yes โ there is no separate profit tax on that income. But it applies only to income covered by the regime: salary, rent, dividends, interest, royalties and several other categories stay under the ordinary rules. The rate rises to 3% for the rest of the calendar year once your income from economic activity passes GEL 500,000 (GEL 700,000 for wine tourism and agritourism); earlier months are not recalculated.
No โ these are two separate steps. First you are registered as an Individual Entrepreneur, then you apply to the Revenue Service for Small Business Status. The certificate is normally issued within 2 working days, and the status runs from the date shown on it.
Be careful here. Consulting, including tax consulting, is on the prohibited list alongside medical, architectural, legal, notarial and auditing work. What matters is how your activity is legally classified, not how you word your invoices. If the Revenue Service later finds a prohibited activity, the status is revoked retroactively from the start of that calendar year and the ordinary rules apply for the whole period โ so confirm your classification before relying on the regime.
No. There is no renewal and no expiry date โ the status stays valid until it is cancelled or revoked.
No. Small Business Status concerns income tax only. VAT registration becomes mandatory once your turnover passes GEL 100,000 in any continuous 12 months, and the ordinary VAT rules apply from that point.
Yes. You may apply again if you meet the statutory conditions, and a new certificate is issued with a new registration number. The conditions depend on your turnover in the intervening period and on whether you are registered for VAT.
Want us to activate it for you?
We file the application at the Revenue Service and hand you the certificate โ and our accountants can keep the monthly declarations running so you never touch the tax portal.
Reference guide: Relocation.ge โ Small Business Status in Georgia โ
Compiled from public official sources (Tax Code of Georgia; Government Ordinance No 415 of 29 December 2010 on special taxation regimes; Order of the Minister of Finance No 999 of 31 December 2010; Revenue Service of Georgia). Thresholds, rates and the list of excluded activities have been amended several times. This is general information, not legal or tax advice โ confirm the current position with the Revenue Service before relying on the regime.