Georgia's 1 per cent regime is on turnover, capped at 500,000 lari a year — and a long list of trades cannot use it at all

Small Business Status is granted to a registered individual entrepreneur and taxes 1 per cent of turnover rather than profit. There are no deductions — the rate applies to money in, so expenses, equipment and travel do not reduce the bill. The eligibility ceiling is 500,000 lari of annual revenue. Tax is paid monthly, by the 15th of the following month, and an annual income declaration is still required. A Georgian bank account is the practical requirement for paying it. The attraction is not only the rate but the simplicity: no profit calculation, no expense substantiation, no argument with an auditor about what counts.

The exclusion list is longer than most people expect, and it catches exactly the professions that tend to relocate. Activities requiring a licence or permit are out, with private taxi work in Tbilisi named as an exception. So are currency exchange, gambling, staffing and activities requiring significant investment such as excisable goods production. Among professional services, the guides name medical, architectural, legal and notarial, auditing and tax consulting. Plain software development, design, writing and most remote consulting are not on that list, which is why Small Business Status has become the default structure for that group — but an adviser, an auditor or a lawyer should not plan around it without checking their own activity code.

Ask what happens when you cross 500,000 lari and the published guidance stops agreeing with itself. One law firm's page says the standard 20 per cent income tax may apply, and in another passage that the status can be revoked after exceeding the limit in two consecutive years. A separate advisory firm says the status is lost for that year from the point of breach, with later income taxed at 20 per cent on net, and reapplication possible the following year — while elsewhere on the same page describing a three-quarter test. These are not small differences: one version costs you the rest of a year, another costs you two. If your revenue is anywhere near the ceiling, this is the question to take to the Revenue Service or a retained accountant in writing, not to a blog.

The 1 per cent status and VAT registration are two different thresholds, and the VAT one arrives first: registration is triggered when turnover passes 100,000 lari over any rolling twelve months, not over a calendar year. A freelancer comfortably inside the 500,000 ceiling can therefore still cross into VAT and owe 18 per cent on supplies, which is the single most common unpleasant surprise in this regime. Keep a rolling twelve-month running total from your first invoice, and watch that number rather than the one on the status certificate.