Georgia's 1% small business tax: who qualifies, how to register, what you pay

Small business status is the main reason freelancers and entrepreneurs choose Georgia: instead of regular income tax you pay 1% of turnover. This guide covers how the regime works, how to register, and what to do once you have the status.

What is small business status?

It is a special tax regime for individual entrepreneurs (IE). A regular IE in Georgia pays 20% income tax on profit, while an IE with small business status pays 1% on total turnover (revenue), as long as turnover stays under 500,000 GEL per year. The tax applies to money received, not profit: expenses are not deductible.

Who is the 1% regime for?

The typical profile is a specialist working with foreign clients: a developer, designer, consultant, marketer, or writer. Income arrives in dollars or euros, clients are outside Georgia, and expenses are low.

Important: some activities are excluded from small business status — the list is set by government decree (it includes, for example, consulting services, medical and legal practice, and currency operations). The wording in the list is not always obvious, so if your work is anywhere near "consulting", check your activity code with an accountant or the Revenue Service before applying.

What you pay

• 1% of turnover — while year-to-date turnover stays under 500,000 GEL.
• 3% — from the month in which the 500,000 GEL threshold is exceeded, until the end of the tax year.
• Exceed the threshold two years in a row and the status is revoked.

For comparison: without the status an IE pays 20% on profit. There is also micro business status (0% on turnover up to 30,000 GEL per year), but it is limited to individuals without employees and has extra restrictions.

How to register: two steps

Step 1. Register as an individual entrepreneur

IE registration is done at the House of Justice or online. You need an identity document and a legal address in Georgia. Registration usually takes one business day; the state fee is small and depends on urgency.

Step 2. Apply for small business status

After registering as an IE, apply for small business status — through your rs.ge account or at a Revenue Service service center. The status takes effect on the 1st of the month after you apply— until then income is taxed under the general rules, so apply as early as possible.

Your obligations once you have the status

Monthly declaration

The declaration is filed on the rs.ge portal every month, between the 1st and the 15th of the month after the reporting one. The tax is paid by the same deadline. Details in our step-by-step rs.ge filing guide.

Converting foreign-currency income

Turnover is declared in lari. Foreign-currency income is converted at the official National Bank of Georgia rate for the date the income arrived— not your bank's rate and not the rate on filing day. Use our free NBG rate calculator for a quick conversion.

Zero declarations

If a month had no income, it is still recommended to file — a zero declaration. Skipped months risk fines and questions from the tax office.

The VAT threshold

Small business status does not switch off the VAT rules: if taxable turnover exceeds 100,000 GEL in any 12 months, VAT registration becomes mandatory. For most freelancers providing services to foreign clients the export of services is outside VAT, but verify this with an accountant for your situation.

Common mistakes

• Calculating the tax on the amount that reached your account after payment-system fees instead of the full income amount.
• Using a commercial bank's rate, or the rate on the filing date, instead of the NBG rate on the date the income arrived.
• Skipping months with no income instead of filing zeros.
• Starting work before the status is active (it starts on the 1st of the following month) and falling under the general rate.

How MyIncome.ge makes the 1% life easier

The service tracks your payments, automatically converts each one to lari at the NBG rate for its date, and prepares your monthly turnover and tax totals — all that is left is to copy them into the declaration on rs.ge. Try it free.

Disclaimer: this material is general information, not tax advice. Rules change; verify current requirements on rs.ge or with a qualified accountant.

Last updated: July 18, 2026