Revocation of Small Business Classification and Closure of Individual Entrepreneur Status

The Tax Code of Georgia was amended on April 18 to allow individual entrepreneurs to revoke their small business classification before the end of the year. As per Article 89, if an individual entrepreneur applies to the tax authority for cancellation before the end of the year, the status will be cancelled from the following month. Previously, small business status was cancelled from the beginning of the next calendar year based on a personal statement.

 Additionally, an individual entrepreneur must cancel their small business status if:

• They exceed the income threshold of 500 thousand lari for two consecutive years and approach the mark for the third year;
• Or if they earn just under 1.5 million lari in their first year of work. 

However, they can exceed a maximum of 1 million lari for two consecutive years.

If the projected business revenue exceeds the stated amount, it is advisable to operate as a regular sole proprietor or LLC at first. Furthermore, it is important to note that any additional income details need to be examined on a case-by-case basis.

Closing a small business and ceasing to function as an individual entrepreneur in Georgia is a straightforward process. However, it’s essential to conduct a tax audit to ensure previous declarations were filed correctly and all taxes were paid and check for any fines in the tax office. The closure procedure takes one business day after submitting an application, and cancelling the status of a small business is a separate process from closing an individual entrepreneur. Both procedures can be done remotely, with an electronic application for cancelling the status and a power of attorney for closing the IE.