Georgia's 1% tax: who gets small business status

The 1% turnover rate is the main reason freelancers and remote specialists register as sole traders in Georgia. That rate does not come with registration, though: it comes from a separate small business status, granted by the revenue service and only on application.

Here is who will not be granted it, which income falls outside the relief, and what happens when turnover outgrows the threshold.

What small business status means in Georgia

Small business status is a preferential tax regime for sole traders. It taxes turnover at 1% rather than profit after expenses, so there is no need to track costs for tax purposes.

Registering the business and obtaining the status are two separate procedures at two separate authorities. The National Agency of Public Registry enters the business into the register through the House of Justice, while the Revenue Service grants the status on an application from your online account. Filing from the account is free; filing at a service centre costs GEL 100.

Neither a residence permit nor Georgian citizenship is required: a foreign passport and being over 18 are enough. Registration together with the status is arranged as a package — a sole trader in Georgia from $225.

Who will not get the 1% rate

The list of excluded activities is set by annex 4 to government decree 415. The 1% rate does not cover:

• consulting in full, with tax advisers named in the rule merely as an example;
• medicine, architecture, advocacy, notarial work and audit;
• licensed occupations and currency operations;
• gambling and the production of excisable goods;
• the supply of personnel.

Development, design and marketing are not on the list, so the status is available for them. What decides it is not the name of the profession but the activity code you state at registration, which is why the code is chosen in advance.

If your activity is on the closed list you can still register as a sole trader — just without the preferential rate, under the general rules.

There is an even better regime: micro business

With turnover up to GEL 30,000 a year there is micro business status at a 0% rate. As soon as turnover passes that threshold, micro status is lost for the current year and you move to small business at 1%. Income earned within the micro threshold already passed is not taxed retroactively.

Which income falls outside the 1% turnover

The relief works on business turnover. Other income is counted separately and has its own rates:

A car is exempt six months after the right is registered and other assets after two years of ownership; otherwise the rate runs from 5 to 20% depending on the asset.

This distinction matters more than it looks. People see “1% tax” and assume their whole financial life in Georgia costs one per cent, then meet 20% on royalties or 5% on dividends.

What happens above GEL 500,000 of turnover

From the month you exceed the threshold and until the calendar year ends the rate becomes 3% instead of 1%. From January it returns to 1%, provided the threshold is not crossed again.

If turnover exceeds GEL 500,000 two years running, small business status is cancelled entirely and the sole trader moves to the general regime. A growing business should therefore work out in advance whether to stay a sole trader or move the activity into a company.

When small business status takes effect in Georgia

Since 7 March 2026 the status and the 1% rate apply from the day the application is filed with the revenue service. The previous rule required waiting until the first day of the following month and no longer applies.

In practice: register the business and file for the status straight away, and your very first receipts fall under 1%. Previously any income before the start of the month was taxed under the general rules.

The small business certificate is issued by the Revenue Service. If it is lost or damaged, it is reissued on a separate application through your online account.

VAT above GEL 100,000 of turnover in Georgia

VAT registration becomes mandatory once turnover exceeds GEL 100,000 over any continuous 12 months. It is a rolling period rather than a calendar year, and the application is filed within two working days of crossing the threshold.

VAT does not cancel small business status: these are two independent regimes and the 1% on turnover continues to apply. Services to foreign clients are zero-rated, because the place of supply follows the client and therefore lies outside Georgia. Registration and reporting are still mandatory once the threshold is passed.

Filing deadlines and tax payments in Georgia

The declaration is filed monthly, by the 15th of the following month, through your account on the rs.ge portal. The tax itself is due by the same date.

You can handle the reporting yourself: the portal is straightforward and a freelancer has few transactions. Once the volume grows or VAT enters the picture, the books go to accounting support in Georgia from $30 a month.

Keep the new requirement in mind separately: since 1 March 2026 a sole trader working with local clients needs a right to labour activity. The details and the list of exemptions are in the breakdown of work permits in Georgia.

What to check before registering

Four questions decide whether the regime suits you:

1. 1Does your activity qualify for the status, or is it on the closed list?
2. 2What turnover do you expect this year, and will you hit GEL 100,000 for VAT or GEL 500,000 for the rate?
3. 3Do you have income outside turnover — dividends, royalties, rent — that is taxed separately?
4. 4Do you need Georgian tax residency? It does not come with the business and is arranged separately.

This article is for information only and is not legal advice. Requirements and fees change, so check the current conditions with a lawyer before you file: ask a question in a consultation.