The 1% regime does not automatically apply to everyone registered as an individual entrepreneur. An entrepreneur natural person must meet the Tax Code requirements and obtain small business status from the tax authority.

Source for this section: Matsne — Tax Code of Georgia — Articles 88–89

When does the 1% rate apply?

Under Article 90 of the Tax Code, qualifying taxable income of a person with small business status is taxed at 1%, subject to statutory exclusions.

Source for this section: Matsne — Tax Code of Georgia — Article 90

What happens above the threshold?

If gross income from economic activity exceeds GEL 500,000, the 3% rate applies from the relevant month through the end of the calendar year. A separate GEL 700,000 threshold applies to specified wine and agritourism operators.

Source for this section: Matsne — Tax Code of Georgia — Articles 89–90

Tax and business

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Check the income type

Salary income and excluded activities do not automatically fall within the 1% regime. VAT registration and status-retention rules must also be checked separately.

Source for this section: Matsne — Tax Code of Georgia — Articles 88, 90, 92

What should you establish before starting?

Prepare three facts: who is carrying on the activity, what is being sold and which transaction generated the income. “I freelance” or “my client is abroad” does not determine the tax regime by itself. Compare the contract with the actual service; do not classify every incoming bank transfer as the same kind of income.

A simple calculation example

Assuming verified eligibility, taxable income of 10,000 GEL and an applicable 1% rate, the calculation for this tax is 10,000 × 0.01 = 100 GEL. This example does not establish your eligibility, deductible expenses or completion of other obligations. Determine the tax base before selecting the rate.

Organising your records

Link each month’s contracts, invoices, receipts and applicable status in one table. Record duplicate payments, refunds and personal transfers separately so you can explain them later. A bank statement alone may not establish the purpose of a transaction.

Questions to ask your accountant

Ask when the status takes effect, whether the activity qualifies and how income sourcing is assessed. Check VAT, employee payroll and other obligations separately. Track the month in which turnover approaches the threshold. Keep the answers and calculations with the supporting contracts.

Preparation checklist

Registry extract, tax status, contracts, invoices and income records

Before deciding

I am starting a business in Georgia

Choose legal form, activity and tax status separately. Registration does not automatically create small-business status. Income sourcing and regulation of the activity need separate checks from registration and bank-account opening.

Official sources

  1. Matsne — Tax Code of Georgia — Articles 88–91
  2. Georgia Revenue Service

Fees and procedures may change; verify the current official source before applying.