Georgia's 1% Tax for Small Business - How it Works [2026 Guide]

Reconciling a month of Wise transfers, cash payments, and card terminal receipts against an rs.ge declaration form is where most Individual Entrepreneurs in Georgia lose an afternoon, or make a mistake that costs them later. Small Business Status makes Georgian taxes genuinely cheap. It does not make the paperwork obvious. This guide covers eligibility, the 500,000 GEL cap, the exact declaration columns, and the filing deadline, checked against the Tax Code of Georgia and the Revenue Service’s own rules.

What Is Small Business Status in Georgia?

Small Business Status (SBS) is a special tax regime under the Tax Code of Georgia that lets a registered Individual Entrepreneur pay 1% income tax on turnover instead of the standard 20% personal income tax on profit. It is granted by the Revenue Service to natural persons who register as an IE and are approved for a small business certificate.

Two things have to be true before the 1% rate applies to you:

• You are registered as an Individual Entrepreneur (IE) with the Public Registry.
• The Revenue Service has approved your application for Small Business Status. The status is not automatic just because you registered as an IE.

SBS is one of three special regimes for solo operators in Georgia:

Micro Business status is for very small, solo operations and drops off automatically once you cross 30,000 GEL in a calendar year or take on staff. Most freelancers, consultants, and remote workers who outgrow that threshold move to Small Business Status, which is the regime this guide covers.

Who Is Eligible for Small Business Status

Eligibility is broader than most people expect, which is exactly why it attracts so many expats and remote workers.

Citizenship and residency. Any natural person can apply, including foreigners with no Georgian citizenship or residence permit. You do not need to be a Georgian tax resident to register as an IE or hold Small Business Status. Tax residency (determined separately by spending 183+ days in Georgia within a 12-month period) affects your worldwide tax position, not your eligibility for SBS itself. Those are two different questions, and conflating them is a common source of confusion for digital nomads.

Business registration. You register as an Individual Entrepreneur through the Public Registry (House of Justice), then apply for Small Business Status separately through your personal account on rs.ge. Registration can be done in person in a single day, or remotely through a notarized and apostilled power of attorney, which takes longer.

Banking. There is no legal requirement to use a Georgian bank account. You can receive business income into a personal account, a foreign account, or a Georgian business account, provided you declare it accurately. In practice, a dedicated account (even a personal one used only for business) makes the monthly reconciliation far less painful, which matters once you see how the declaration form is structured below.

Excluded activities. Not every type of income qualifies, regardless of turnover. See the excluded activities section further down before you assume you’re eligible.

The 500,000 GEL Annual Cap, and What Happens If You Cross It

This is the number that defines Small Business Status. It is a cumulative, calendar-year total across all your SBS-eligible business activity, not a monthly limit and not a rolling 12-month window.

The Revenue Service tracks this as a running year-to-date figure. Every month, your declaration shows cumulative turnover since January 1st, and the tax rate applied to that month’s income depends on where that cumulative figure lands.

Under 500,000 GEL for the year: everything is taxed at 1%.

Cross 500,000 GEL during the year: this is a genuinely common point of confusion, and even several professional advisory sites state it incorrectly. The 3% rate does not apply only to the excess amount above the cap. Once your cumulative turnover crosses 500,000 GEL, the entire remainder of that calendar year, starting from the first day of the month in which you crossed it, is taxed at 3% instead of 1%, not just the sliver over the line. Say you earn a steady 60,000 GEL a month. Through month 8 your cumulative total is 480,000 GEL, still under the cap, so all of it is taxed at 1%. In month 9, your cumulative total passes 500,000 GEL, so all of month 9’s income, not just the amount over 500,000 GEL, is taxed at 3%, and so is every month after it through December. On January 1st of the following year, the counter resets and you’re back to 1% from GEL one, provided you stay under the cap again.

Cross it two years in a row: this is the consequence that actually costs you the status. If your combined turnover exceeds 500,000 GEL in two consecutive calendar years, Small Business Status is revoked automatically, effective January 1st of the third year. From that point you’re taxed under the standard regime, 20% on net profit, with the fuller bookkeeping and expense-tracking obligations that come with it. A single over-the-cap year does not revoke your status on its own. It’s the second consecutive year that triggers it.

Agritourism exception: businesses operating in agritourism or wine tourism get a higher cap of 700,000 GEL, in effect since January 1, 2025.

Don’t confuse this cap with the separate VAT registration threshold. Any business, regardless of Small Business Status, must register for VAT once turnover exceeds 100,000 GEL in any rolling 12-month period. That’s a different tax, a different registration, and a different set of rules, and hitting it doesn’t affect your SBS eligibility on its own. It just adds an 18% VAT obligation on top.

What Counts as Taxable Turnover

Small Business Status taxes gross turnover, not profit. There are no deductible expenses under the standard 1% calculation. Every lari that comes in from your business activity counts, regardless of how it arrives:

• Bank transfers to a Georgian or foreign account
• Cash received and rung through a cash register
• Card payments through a POS terminal
• Payments through Payoneer, PayPal, Wise, or similar payment processors
• Cryptocurrency received as payment for services
• Barter or in-kind payment for services rendered

Some income is never eligible for the 1% rate, no matter your status, and is always taxed at the standard 20% personal income tax rate instead:

• Rental income
• Capital gains from selling assets
• Interest and dividends
• Royalties
• Gifts and inheritances
• Gambling winnings

There’s one more wrinkle worth knowing even though it rarely applies to service-based freelancers: if you can document business expenses equal to 60% or more of your income, for example if you’re buying and reselling physical goods rather than billing for your own time, that income is taxed at 3% instead of 1%. This rule exists to stop businesses with real cost-of-goods-sold from using SBS the same way a pure service provider does. Most consultants, developers, designers, and other remote-work freelancers never hit this because they have little to no documented cost of goods, but it matters if your small business involves buying inventory.

How Monthly Filing Works on rs.ge

Every SBS holder files a declaration every month, whether or not they earned anything.

1. Log into your personal account on rs.ge. You’ll need your taxpayer identification number (TIN), issued when you registered as an IE, and your account password. Access requires two-step verification by SMS, which only works with a Georgian mobile number.
2. Open the declarations section and select the small business income declaration.
3. Enter your cumulative turnover from the start of the calendar year, including the month you are declaring — the form’s line 15 is a running total through the reporting month, not just prior months.
4. Break out the current month’s income by how you received it, split across the payment-method columns (cash, POS, bank transfer, other).
5. Let the system calculate your tax rate and amount owed for the month, based on whether your running total has crossed the 500,000 GEL cap.
6. Submit and pay from a Georgian bank account before the deadline.

The declaration must be filed even in a month with zero income. Since 2026, skipping a month no longer counts as an automatic zero filing. You have to actively submit a nil declaration or you’re treated as non-compliant.

Understanding the Declaration Columns

This is the part that trips people up most, because the form asks for the same underlying number sliced three different ways: a running annual total, a monthly total, and a breakdown of that monthly total by payment method. Here’s what each relevant column actually means on the small business income declaration.

If you file on a cash basis, which is the default and by far the most common method for freelancers and small operators, you only fill in columns 15 and 18 through 21. Columns 16 and 17 calculate themselves once you’ve entered the rest. If you file on an accrual basis, three additional columns come into play for income accrued but not yet received, previously taxed income actually received in the current period, and advances received during the reporting period. Most solo freelancers and remote workers use the cash method, since it matches how they’re actually paid.

This column structure has been in place since the reporting period for December 2024 (the declaration filed in January 2025), so if you’re working from instructions written before that, the layout on screen won’t match what you’re reading.

This is also the exact calculation Tax-Calculator.ge exists to remove from your plate. Upload a bank statement and it maps every transaction into the right column, cumulative total included, so you’re copying finished numbers into rs.ge instead of reconstructing them by hand each month.

Filing Deadline and Payment

The monthly small business declaration is due by the 15th day of the month following the reporting period. A January declaration, covering income earned in January, is due by February 15th. That same date covers both submitting the declaration and paying the tax owed, so leave yourself time for both, not just one.

Miss it, and interest accrues on the unpaid tax under the Tax Code of Georgia from the first day of delay, at a rate of roughly 0.05% per day. That sounds small, but left unpaid it works out to somewhere around 18% a year, which adds up fast on what started as a small monthly tax bill.

2026 Changes to Small Business Status

A few procedural rules changed in early 2026 under amendments to the Ministry of Finance’s governing order on special tax regimes. None of them touch the 500,000 GEL cap itself, but they’re worth knowing if you registered before this year or you’re comparing this guide to older advice:

• Status now starts on the day you apply. Previously, Small Business Status only took effect on the first day of the month following your application, so anything you earned in the gap was taxed at the standard rate. As of the amendments that took effect March 7, 2026, approval is effective from the date of your request.
• Zero declarations are now mandatory, not assumed. A month with no income used to be treated as an automatic zero filing if you skipped it. That’s no longer the case. You now have to actively submit a nil declaration every month you’re registered, even at zero income, or risk being treated as non-compliant.
• Reapplying after revocation now has a waiting period. If your status is revoked for reasons other than exceeding the turnover cap two years running, you can reapply, but only from the tax year following the year it was revoked, not immediately.

Excluded and Restricted Business Activities

Some business activities cannot use Small Business Status at all, regardless of turnover. Broadly, these fall into a few categories under Georgian tax regulations:

• Regulated professional services: legal and notarial services, tax and audit consulting, medical services, and licensed architectural or engineering consulting
• Financial and insurance activities: banking, currency exchange, financial intermediation, insurance and brokerage
• Gambling and betting: casinos, sports betting, lotteries, and similar operations
• Cryptocurrency exchange or custody businesses: running an exchange or custodial wallet service, as opposed to simply being paid in crypto for unrelated work, which is allowed
• Certain real estate activity: real estate brokerage and property management carried out for third parties
• Import, export, or wholesale trade in excise goods: alcohol, tobacco, and fuel
• Employment income: wages under a labor contract cannot be reclassified as 1%-taxed service income

That last point catches more people than it should. If you work for a single client under terms that look like employment (fixed hours, ongoing supervision, no other clients, equipment provided by the client), the Revenue Service can look past the “service agreement” label and treat it as disguised employment. Naming the contract a freelance agreement doesn’t settle the question. The substance of the working relationship does.

Common Mistakes to Avoid

Mixing personal and business funds. Nothing in the law requires a separate bank account, but running both through one account makes it genuinely difficult to reconstruct your actual business turnover at declaration time, and it’s the first thing that looks messy if you’re ever asked to substantiate your numbers.

Not tracking the cumulative total. It’s easy to file each month in isolation and lose track of where your year-to-date turnover actually sits relative to the 500,000 GEL cap. If you don’t know your running total, you won’t see the 3% rate coming, and you won’t know how close you are to a second consecutive over-the-cap year.

Assuming no income means no filing. A month with zero business activity still needs a nil declaration. Skipping it is treated as non-compliance rather than an implicit zero.

Confusing the SBS cap with the VAT threshold. The 500,000 GEL small business cap and the 100,000 GEL VAT registration threshold are separate rules that can both apply to the same business at the same time. Staying under one doesn’t exempt you from the other.

Racking up cash register violations. If you’re fined for cash register violations three times within a calendar year, Small Business Status is revoked retroactively to the start of that year, not just going forward. This mostly hits retail and hospitality operators who handle cash regularly, but it’s a harsh enough consequence to flag even for businesses that rarely see cash.

Letting a single-client relationship drift into disguised employment. Covered above, but worth repeating as a standalone mistake: if your “client” looks a lot like an employer, don’t assume the 1% rate is safe just because you invoice instead of receiving a payslip.

Missing the 15th deadline out of habit. It’s a moving date relative to the calendar month, not a fixed day number people remember automatically, and late filing starts accruing interest from day one of the delay.

When to Get Professional Help

Most of what’s above covers the straightforward case: one person, one country of activity, income that’s clearly eligible for the 1% rate. Once you’re dealing with VAT registration, income that spans multiple tax categories, cross-border tax residency questions, or an actual audit, it’s worth getting advice tailored to your specific situation rather than working from a general guide. If you’d rather have a person on it than a webpage, the accounting team at Tbilisi-Expat.com starts with a free consultation and handles monthly rs.ge filings for expats and locals alike.

Key Takeaways

• Small Business Status taxes turnover at 1% up to 500,000 GEL a year, cumulative across the calendar year, not a monthly limit.
• Cross the cap once and your entire turnover from that month onward, not just the excess, is taxed at 3% for the rest of that year. Cross it two years running and the status is revoked from January 1st of the third year.
• Filing is monthly on rs.ge, due by the 15th of the following month, and now mandatory even at zero income.
• The declaration form splits your monthly income into cash register, POS, bank transfer, and other payment columns (18 through 21), against a running annual total (column 15).
• Certain professional, financial, gambling, and regulated activities are excluded from SBS regardless of turnover.
• The 100,000 GEL VAT threshold is separate from the 500,000 GEL SBS cap and can apply at the same time.
• Tax-Calculator.ge turns a bank statement into the finished column-by-column numbers, so you’re not reconstructing them by hand every month.

Frequently Asked Questions

Who is eligible for Small Business Status in Georgia?

Any natural person registered as an Individual Entrepreneur can apply, including foreigners with no Georgian citizenship or residence permit. You need Revenue Service approval of your application in addition to the IE registration itself, and your business activity can’t fall into one of the excluded categories like legal services, medical services, or financial intermediation.

How do I apply for Small Business Status?

Register as an Individual Entrepreneur through the Public Registry first, then apply for Small Business Status separately through your personal account on rs.ge. As of a Ministry of Finance amendment effective March 7, 2026, the status takes effect from the date you submit the application, not the first of the following month as it used to work.

What happens if I go over the 500,000 GEL threshold?

The 3% rate applies to all of your turnover from the first day of the month in which you crossed 500,000 GEL through December 31st, not just the amount over the cap. This is a commonly misstated detail, even some professional advisory sources get it wrong. Your status is not revoked for a single over-the-cap year. It’s only revoked, effective the following January 1st, if you exceed the cap in two consecutive calendar years.

Do I still need to register for VAT if I have Small Business Status?

Yes, if applicable. VAT registration is triggered separately once your turnover crosses 100,000 GEL in any rolling 12-month period, regardless of your Small Business Status. The two thresholds and registrations are independent of each other.

Is income from cryptocurrency taxed at 1% under Small Business Status?

Yes, if you’re being paid in cryptocurrency for eligible services, that income is reported in column 21 of the declaration along with other income not withheld at source. Running a crypto exchange or custodial wallet business is a different matter and is excluded from Small Business Status entirely.

Do I need a Georgian bank account to hold Small Business Status?

No. There’s no legal requirement to use a Georgian account, and you can receive business income into a personal or foreign account as long as you declare it accurately. Access to rs.ge itself does require a Georgian mobile number for SMS verification.

What happens if I miss the monthly filing deadline?

Interest accrues on the unpaid tax from the first day of delay, at roughly 0.05% per day under the Tax Code of Georgia. Filing a nil declaration is also mandatory in months with no income. Skipping it is no longer treated as an automatic zero filing.

Can I have employees under Small Business Status?

Yes. Small Business Status allows employees, unlike Micro Business Status, which is limited to solo operators. Hiring staff does add payroll withholding and reporting obligations on top of your monthly turnover declaration.

What’s the difference between Micro Business and Small Business status?

Micro Business status covers turnover up to 30,000 GEL a year at a 0% rate, with no employees allowed. Small Business Status covers turnover up to 500,000 GEL at 1% (3% above the cap) and allows employees. Most people who outgrow Micro Business status move into Small Business Status rather than jumping straight to standard taxation.

Can I deduct business expenses under the 1% rate?

No. Small Business Status taxes gross turnover with no expense deductions under the standard calculation. The one exception is the 60%-documented-expense rule, which reclassifies that income to the 3% rate rather than allowing a deduction, and mainly affects businesses reselling physical goods rather than billing for services.

Sources

• Revenue Service of Georgia, Small Business Status
• Tax Code of Georgia, Legislative Herald of Georgia
• Minister of Finance of Georgia, Order on Special Taxation Regimes
• Government of Georgia, Regulation on Activities Excluded from Micro and Small Business Status