Tax Rates
| Annual turnover | Rate |
|---|---|
| Up to 500,000 GEL | 1% |
| 500,000 – 1,000,000 GEL (for 1–2 years) | 3% on the excess |
| Exceeding 500,000 GEL for more than 2 consecutive years | Status revoked |
A standard IE (without Small Business Status) has no upper turnover limit.
Permitted Activities
Up to two main activity codes can be selected (preferably related), plus a separate code for activities in science, art, or literary work.
Tax Filing
Returns are filed monthly — between the 1st and 15th of each month through the Revenue Service portal (rs.ge). A nil return must be filed even when there are no transactions. A standard IE (without the status) files annually.
Employment and Service Agreements
An IE with Small Business Status may only receive income under service agreements. The services in the agreement must match the IE's registered activity code. It is advisable to have multiple clients and varied income sources to avoid the revenue authority reclassifying the arrangement as an employment relationship.
In addition to IE activity, working as an employee under a separate employment contract is permitted — in that case, salary income is subject to 20% withholding tax.
VAT
VAT registration is mandatory once turnover exceeds 100,000 GEL over 12 months — if services are provided within Georgia. Electronic services to non-resident legal entities and services outside Georgian jurisdiction are VAT-exempt.
Physical Presence in Georgia
Small Business Status permits working from any country. It is advisable to cross the Georgian border at least twice a year to maintain a connection with the jurisdiction.
Voluntary Cancellation
Since April 2023 (amendment to Article 89 of the Tax Code), an IE may apply to the tax authority to cancel Small Business Status before the end of the year — the status ceases to apply from the first day of the following month. Previously, cancellation was only effective from the beginning of the next calendar year.
Mandatory Cancellation
Small Business Status must be cancelled in the following cases:
- Turnover exceeded 500,000 GEL for two consecutive years and is projected to exceed that threshold in the third year.
- Income approaches 1,500,000 GEL in the first year of operation.
If projected revenue exceeds the stated thresholds, registering as a standard IE or LLC from the outset is advisable.
Closing an IE
Cancellation of Small Business Status and closure of the IE are two separate procedures. Both can be done remotely:
- Status cancellation: electronic application.
- IE closure: by power of attorney; takes 1 business day after submitting the application.
Before closure, a tax audit is recommended — to confirm that all prior returns were filed correctly, all taxes were paid, and there are no outstanding fines.