Small business in Georgia is available only for individual entrepreneurs. The tax rate depends on income from the enterprise. The lower the income, the softer the requirements.

Micro business

The main advantage is the absence of income taxes, but there are three requirements: 

  • turnover must not exceed 30,000 GEL per year;
  • there should be no hired employees;
  • to be not on the register of VAT payers.

It is not necessary to have a cash register for micro business, but accounting, composition of paperwork showing income and outgoings, submission of the declaration are a must. 

Small business

A small business can be established by an individual entrepreneur with a turnover not exceeding 500,000 GEL per year. This category also includes options with taxation divided by turnover:

  • up to 100,000 ₾ – 1% of the profit;
  • 100,000 – 500,000 ₾ – 1% of the profit and 18% VAT.

In case of exceeding 500,000 GEL, the tax rate will be increased to 3% in a year, then the individual entrepreneur will lose the status of a small business in two years. It will increase the income tax by up to 20%. 

How to open individual entrepreneurship

You need to visit the Public Service Hall with a filled statement in Georgian language, passport and legal address, pay the state duty, and, after registration, register with the revenue service. It is important to define the main parameters when applying to the Public Service Hall.

Other nuances are not less important. For example, it can be helpful to bring a person who speaks Georgian fluently. If you are concerned about a lack of understanding of local law, a lawyer may be able to help. 

Unavailable types of activities

During registration not only financial components are taken into account, but types of activities too. Some of them are not available for statuses with a low tax rate. Among them: 

  • jurisprudence;
  • accounting;
  • consulting services;
  • gambling;
  • medicine;
  • real estate sell and rental;
  • sale of cars;
  • stock transactions.

Available sectors

Available sectors for getting a status of small business were reformed in August 2022 and now they do not differ between offline and online services. Form of realization doesn’t matter now. For example, trade is no longer divided into wholesale and retail, advertisement is not divided by types of marketing. 

In the past it was necessary to describe services in detail when applying for the tax service. Now, activity code is given without detailed explanations. Simply select a sector from the renewed list, which is published on the site of Revenue service, and then get a code. The list is available only for registered entrepreneurs.  

How to reduce tax burden

The best option is to register individual entrepreneurship and establish micro business or small business. It is better to do it on time since new tax rates will be imposed only in the next month. In case of a delay tax rate for the first time will be 20%, then preferential taxation will be available. 

Other options are available for the IT sector, producers in free industrial zones, enterprises with international status, but mostly the options are for individual entrepreneurs with large turnovers, LLCs and other types of medium and large businesses.  

Optimization of taxes is possible with the help of outsourcing. This option reduces the need to hire an accountant and a lawyer, so there is no need for tax and pension payments. Also, professionals can help to compose documentation and reports in the most efficient way. 

Our cases

Tax optimization is a regular and well-known procedure for Jara Accounting experts. Our cases include helping the travel agency and the restaurant. The tax burden was successfully reduced for a number of companies in Georgia, Cyprus and Russia. Lawyers distributed payments, assets and production cycle, created an optimal corporate structure.

There were certain difficulties with the processing of documents that had to follow legislations of three different countries and be composed in the appropriate number of languages, but the goal was achieved and the work process of the companies has become more rational and cleaner, taxes were decreased.  

Get in touch with Jara Accounting experts to earn more and pay less. Consultation is free of charge, use the link to book one.