Small Business Status with 1% taxation 

 

Here are the activities and restrictions that are not eligible for the favourable tax treatment of small business status in Georgia:

1. Activities that require special licensing
2. Production of excise goods
3. Advocatory services and law firms
4. Tax and legal consulting services
5. Medical services
6. Architectural services
7. Auditory and notary services
8. Beauty centers
9. Car repair services
10. Gambling activities
11. Foreign exchange transactions

These restrictions are in place to ensure compliance with specific regulations and to maintain fairness in the tax system. It's important to be aware of these limitations when considering small business status in Georgia.

Annual Revenue Limit Under Small Business Status in Georgia

Individual Entrepreneurs registered under Georgia’s Small Business Tax Status (SBS) enjoy preferential taxation with a reduced income tax rate of 1%. However, this special tax regime is subject to an annual revenue threshold of 500,000 GEL.

 

What Happens If You Exceed the 500,000 GEL Limit?

• You will be taxed at 3% on the portion of income above 500,000 GEL for that year.
• If you exceed the limit twice within two consecutive calendar years, your Small Business Status will be revoked.
• Once revoked, you cannot reapply for Small Business Status for the next two years.

Example:

If you earn 600,000 GEL in a given year:

• You pay 1% tax on the first 500,000 GEL = 5,000 GEL
• You pay 3% tax on the remaining 100,000 GEL = 3,000 GEL
• Total tax: 8,000 GEL

 

Small Business status and VAT 

Individuals who qualify as small businesses in Tbilisi, Georgia enjoy the advantage of a reduced personal income tax rate of 1% instead of the standard 20% rate. However, it's important to understand that being classified as a small business does not exempt individuals from paying Value Added Tax (VAT). Small businesses are still subject to VAT regulations, and VAT will be applicable once their turnover exceeds the threshold of 100,000 GEL within a 12-month period.

 

It's worth noting that if an individual provides services to foreign customers, there is a possibility that VAT may not apply. However, this is assessed on a case-by-case basis in consultation with our team. We can provide guidance and assistance in determining whether VAT is applicable based on your specific circumstances. Our knowledgeable team is here to support you and ensure that you are compliant with VAT regulations while maximizing the benefits of small business status in Tbilisi, Georgia.

 

Our Pricing for Small Business Tax Status Activation