Small Business Status in Georgia — Pay 1% Tax

It is a tax status granted by the Revenue Service that reduces income tax to 1% of gross turnover up to 500,000 GEL a year. It is applied for on top of an Individual Entrepreneur registration — the IE is the legal form, the status is the tax treatment. Without the status, an IE is taxed at ordinary personal income rates.

₾600 plus VAT for the IE registration and the status application together, which covers government fees, activity code selection, accompaniment at the Public Service Hall and bank account guidance. If you do not own or lease Georgian property you also need a registered address, at ₾390 a year.

No. There is no residency requirement to register an Individual Entrepreneur or to hold Small Business Status. You do need a Georgian legal address for the registration itself, which is what the virtual address service provides, but that is an address for the business — not a requirement that you live at it.

On revenue. You pay 1% of everything you invoice, with no deduction for costs. That is why it works so well for service businesses with low expenses, and badly for businesses that buy and resell goods on a thin margin.

Turnover above the cap is taxed at 3% rather than 1% for the remainder of that calendar year, and repeatedly exceeding it puts the status itself at risk. If you are heading toward the cap, that is the point to look at an LLC — we will raise it with you before you get there rather than after.

Georgian law excludes a defined list, which includes licensed and regulated professions such as medical, legal, audit and consultancy activities requiring a licence, gambling, and currency or securities dealing. The list is specific and it turns on your registered activity codes, not on how you describe your job. We check yours against it before you pay.

No, and this catches people out. Tax residency is a separate test — broadly 183 days of physical presence in a rolling 12-month period. You can hold the status without being tax resident. Whether becoming resident helps you depends on where you currently pay tax and what treaty applies.

Not on services invoiced to clients outside Georgia — those are outside the scope of Georgian VAT. VAT registration becomes mandatory once your Georgian-source turnover passes 100,000 GEL in any rolling 12 months, at 18%. Separately, reverse VAT applies to services you buy from abroad even when you are not registered.

If you buy services from outside Georgia — hosting, software subscriptions, a foreign contractor — you are liable to declare and pay 18% Georgian VAT on that purchase, even though you are not VAT registered. It surprises almost every new IE. It is declared monthly, and it is one of the main reasons people use an accountant here.

Yes. Every registered business files with the Revenue Service each month, including months with zero income, by the 15th. Penalties are automatic. Filing runs through the rs.ge portal, which is in Georgian.

Practically, yes. You pay your monthly tax from a Georgian account, and having local banking makes everything else simpler. We guide you through opening one as part of the registration, and can handle the full account opening as a separate service.

Yes, through a notarised and apostilled Power of Attorney. It takes two to three weeks instead of three days and costs more — see remote company registration. The tax treatment is identical either way.

Three days from the first consultation if you are in Georgia and your documents are in order: one to two days to prepare, then registration and the status application on the same day, with Revenue Service confirmation following within a few days.

You cannot convert one into the other — they are different legal forms. What you do is register the LLC, move the business across and close the IE. We handle both ends of that, and it is a common move once turnover approaches the cap or a second owner appears.