Individual Entrepreneur in Georgia (the country)
What an Individual Entrepreneur with Small Business Status actually is, what it costs, who qualifies, and the obligations nobody mentions until after you have registered.
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Most people arrive at this page for one reason: they have heard Georgia has a 1% tax and want to know whether it is real. It is real, it is written into the Tax Code, and it is more restricted than the headline suggests.
This page explains what you are actually signing up for.
What an Individual Entrepreneur is
An Individual Entrepreneur — usually shortened to IE — is a natural person registered to carry on economic activity in their own name. It is the Georgian equivalent of a sole trader.
There is no separate company. There are no shareholders, no share capital, and no limited liability. You and the business are the same legal person, which is why registration takes a morning rather than a fortnight.
On its own, an IE is taxed at the standard 20% rate on taxable income under Article 81(1) of the Tax Code. The 1% everyone talks about comes from a second step.
Small Business Status is the part that matters
Small Business Status is a special tax treatment you apply for separately, after registering as an IE. With it, Article 90(1) taxes you at 1% of turnover instead of 20% of profit.
That distinction — turnover, not profit — decides whether this regime is brilliant or bad for you:
- Brilliant for freelancers, consultants, developers and anyone whose costs are a small fraction of revenue. You pay 1% of what comes in and keep the rest.
- Bad for businesses that buy and resell. You cannot deduct the cost of goods, so 1% of turnover can easily exceed 20% of a thin margin.
The crossover sits at roughly a 5% profit margin. Above it, the 1% regime wins. Below it, the standard regime is cheaper. The 1% tax calculator shows you exactly where you fall.
The limits you have to watch
Two numbers matter, and they are measured over different periods — which is the single most common source of expensive surprises.
| Threshold | Amount | Measured over | What happens |
|---|---|---|---|
| Small Business Status limit | 500,000 GEL | Calendar year | Rate rises to 3% |
| VAT registration | 100,000 GEL | Any 12 consecutive months | You must register for VAT |
The Small Business Status limit resets each January. The VAT threshold does not — it is a rolling window, so you can cross it in the middle of a year without your annual figures looking alarming.
Wine tourism and agro tourism operators get a raised limit of 700,000 GEL under Article 88(3).
Not everyone qualifies
Article 88(2) lets the Government bar particular activities from Small Business Status, and the excluded list is broader than most people expect. Consulting of any kind, legal work, medical practice, audit and architecture are all commonly cited as excluded.
We have to be careful here: that list lives in a Government resolution published only in Georgian, with no English translation, so we cannot verify its current contents against a primary source. Treat any list you read online — including ours — as indicative, and confirm your specific activity with the Revenue Service before you build a plan around it.
This matters more than it sounds. "Consulting" is elastic, and people who describe their work one way on an invoice and another way on a registration form have run into trouble.
What you have to do every month
Small Business Status is not a set-and-forget regime. Article 93(1¹) requires a declaration every month, filed and paid by the 15th of the following month. Twelve filings a year, whether or not you earned anything.
That obligation is why so many people who register enthusiastically end up with penalties eighteen months later. There is a full walkthrough in the monthly declarations guide.
If you earn very little, look at Micro Business instead
Under 30,000 GEL a year, Micro Business status may serve you better: Article 86 exempts it from income tax entirely, and it files once a year rather than monthly. The trade-offs are that you must work without hired labour and stay under a 45,000 GEL inventory balance.
Zero is better than one percent. It is worth checking before you default to Small Business Status.
Where to go next
Start with the calculator to see whether the regime fits your numbers, then read the registration walkthrough when you are ready to act.
Frequently asked questions
Is an Individual Entrepreneur a company?
No. An Individual Entrepreneur is you, registered to do business in your own name. There is no separate legal entity and no limited liability, which keeps registration and accounting simple but means your business debts are your personal debts.
Do I need to live in Georgia to register?
You need to register in person or through a representative with a power of attorney, and in practice you need a Georgian bank account and phone number to file and pay each month. Registration itself does not require you to hold a residence permit.
How much does registration cost?
Registering as an Individual Entrepreneur at the Public Service Hall costs a small state fee, with a higher fee for same-day service. Small Business Status is applied for separately at the Revenue Service and is free.
Where these numbers come from
Verified on against the primary sources listed below. This is information, not legal or tax advice. Rules change and individual circumstances differ — confirm anything you intend to act on with the Revenue Service or a qualified adviser.
Important caveats
- The 1% and 3% rates apply to turnover (gross income), not profit. Business expenses are not deductible under this regime.
- Only income from a Georgian source is taxed under this regime, and salary income is excluded (Article 90(3)).
- Losses cannot be carried forward to the next year (Article 91(5)).
- The VAT threshold is measured over any 12 consecutive calendar months, not the calendar year used for the Small Business Status limit. The two can be crossed at different times.
- VAT registration does not by itself end Small Business Status; the 1% regime and VAT registration can coexist (Article 92).
- Exports and certain exempt supplies are treated specially when measuring the threshold (Article 165(7)).
- The 20% standard rate applies to taxable income (after allowable deductions), whereas Small Business Status applies to gross turnover. A like-for-like comparison must account for that difference.
Sources
- Tax Code of Georgia — Article 90, Taxable income of small business and tax rates — Article 90(1)-(3)
- Tax Code of Georgia — Article 88, Small business — Article 88(2)-(3)
- Tax Code of Georgia — Article 89, Granting the status of small business — Article 89(2)-(5)
- Tax Code of Georgia — Article 93, Filing micro and small business tax returns — Article 93(1^1)
- Tax Code of Georgia — Article 91, Principles of accounting for small business income and costs — Article 91(1), 91(5)
- Tax Code of Georgia — Article 84, Micro business — Article 84(1)
- Tax Code of Georgia — Article 86, Exemption of a micro business from tax — Article 86
- Tax Code of Georgia — Article 85, Granting the status of a micro business — Article 85(2)(b)-(c)
- Tax Code of Georgia — Article 93, Filing micro and small business tax returns — Article 93(1)
- Tax Code of Georgia — Article 165, Registration as a VAT taxpayer — Article 165(1)
- Tax Code of Georgia — Article 166, VAT rate — Article 166
- Tax Code of Georgia — Article 92, Registration of a small business as a VAT payer — Article 92(1)
- Tax Code of Georgia — Article 81, Tax rate — Article 81(1)