The 1% Tax Regime: Small Business Status in Georgia

Who Can Obtain It?

Georgia offers a highly competitive tax environment for individual entrepreneurs. Under the “Small Business Status,” taxpayers benefit from a significantly reduced turnover tax rate.

Eligibility Criteria:

• Registered as an Individual Entrepreneur (IE) in Georgia.
• Annual revenue ≤ 500,000 GEL.
• Does not engage in prohibited activities (e.g., consulting, legal, medical, architectural, auditing services).

Tax Benefits:

• 1% Tax Rate: Applied to total turnover instead of the standard 20% personal income tax.
• Threshold Increase: If annual turnover exceeds 500,000 GEL, a 3% rate applies to the excess amount until the end of the year.

Loss of Status:

The status will be revoked if:

• Annual income exceeds 500,000 GEL for two consecutive years.
• The entrepreneur is fined three times for cash register violations.
• The entrepreneur engages in prohibited business activities.

Pros & Cons:

• ✅ Pro: One of the lowest tax burdens globally for small-scale entrepreneurs.
• ⚠️ Con: Unlimited Liability. As an individual entrepreneur, you are personally liable for business debts with all your personal assets.