Georgia's 1% Small Business Status: Current Rules and Limits

Georgia's Small Business Status is a special income-tax regime for a qualifying entrepreneur natural person. It is not a general 1% corporate-tax rate and it is not automatically available merely because a business is small.

The current rules are in Articles 88-93 of the Tax Code of Georgia.

Who can obtain Small Business Status?

Article 88 provides that Small Business Status may be granted to an entrepreneur natural person.

An eligible person applies to the tax authority for the status, and the tax authority grants a Small Business certificate under Article 89.

The Government may prohibit specified activities from using Small Business Status. Before relying on the regime, the applicant should therefore check both the Tax Code and the current subordinate rules for the actual activity being carried on.

What is the tax rate?

The standard Small Business tax rate is 1% of taxable income falling within the special regime.

If gross income from the person's economic activities exceeds 500,000 GEL, the rate becomes 3% from the beginning of the month in which the threshold is exceeded until the end of that calendar year.

For qualifying wine-tourism and agro-tourism operators, the corresponding threshold in the current Tax Code is 700,000 GEL.

The threshold rules do more than change the rate for one month. Article 89 also contains status-revocation rules where the applicable annual threshold is exceeded in each of two calendar years.

Salary income is not part of the 1% taxable base

Article 90 states that the taxable income of a Small Business consists of Georgian-source income, subject to the Code's exclusions. Salary income is expressly excluded from the Small Business taxable base.

That distinction matters for people who both operate as an entrepreneur and receive employment income. Holding Small Business Status does not turn salary into 1% entrepreneurial income.

Record-keeping and filing

A person with Small Business Status must keep the records and tax-source documents required by Article 91.

Under the current Article 93, the Small Business tax return must be filed and the tax paid no later than the 15th day of the month following the reporting month.

The regime therefore involves recurring compliance, not only obtaining a certificate once.

Small Business Status is not the same as VAT status

The Tax Code separately regulates VAT registration. A person can have Small Business Status and still need to consider VAT registration and VAT obligations under the general rules.

Do not use the 1% headline as a substitute for checking VAT, source-of-income, employment, prohibited-activity, or other tax rules relevant to the actual business.

Before applying

A useful eligibility check asks:

• Are you an entrepreneur natural person?
• Is your actual activity permitted under the current Small Business rules?
• Is the income entrepreneurial income that falls within the special regime rather than salary or another excluded category?
• What is your expected annual gross income?
• Do you have separate VAT or other tax obligations?
• Can you maintain the required records and monthly filings?

For a current tax-structure assessment, contact TK Counsel.