The 1% regime has a ceiling: above 500,000 lari of turnover it becomes 3%
A registered individual entrepreneur in Georgia can hold small business status and pay 1% of turnover while annual turnover stays under 500,000 lari. Above that figure the rate becomes 3%. A separate micro business status exempts an individual with turnover under 30,000 lari and no employees. Outside both regimes personal income is taxed at a flat 20%, and residents owe nothing on income that has no Georgian source.
What the status is, in one line
An individual who registers as an individual entrepreneur in Georgia and then applies for small business status pays 1% of turnover rather than tax on profit. There is no deduction of costs to calculate, because the base is what comes in, not what is left over. For a one-person service business with few expenses, that arithmetic is unusually kind: a year of 200,000 lari in fees costs 2,000 lari in tax. The number that people quote in conversation as the Georgian one-percent tax is this, and it is real, but it belongs to a specific legal status that you have to ask for rather than to the country at large.
The ceiling is 500,000 lari, and crossing it triples the rate
Small business status is available while annual turnover is below 500,000 lari. PwC records that the rate increases to 3% if annual turnover exceeds that figure. Three per cent of turnover is still a modest tax by most standards, but the jump is worth planning for rather than discovering: it is three times what you were paying, and it applies to gross receipts, so a business running on thin margins feels it more than the headline suggests. If you are anywhere near the line, the useful thing to track is a rolling annual turnover figure you can see at any time, not a number your accountant assembles after the year has closed.
Below 30,000 lari there is a status that pays nothing
The regime below small business status is micro business. An individual with annual turnover below 30,000 lari, who registers for the status and has no employees, is exempt from tax on business income. The no-employees condition is the one that decides most cases, because it rules out anything with even a single part-time hire on the books. In practice this is the status for a genuinely solo, small operation: a guide working their own tours, someone letting out one or two rooms as a side activity, a craftsperson selling at a market. It is also a reminder that the Georgian system taxes by status rather than by sector, so the question to answer first is which status you qualify for.
If neither applies: 20% flat, and foreign income left alone
Outside these statuses, personal income in Georgia is taxed at a flat 20%. The companion rule matters as much: PwC records that resident individuals are exempt from tax on income that does not have a Georgian source. For someone who moves here but keeps earning abroad, that pairing is the substance of the arrangement, and it does not depend on holding any special status at all. The practical order of work is therefore to establish what your income is and where it arises before choosing a registration. Status is granted on application for a defined activity, so if your income comes from renting property rather than from trading or services, confirm which regime your case falls into before you register anything.
#small business #1 percent #individual entrepreneur #income tax
Written by us from the source linked above, not investment, legal or tax advice. Figures and rules change — confirm anything that matters before acting on it.
