The most damaging mistake in Georgia's small business regime is assuming eligibility. Certain activities cannot use the 1% rate at all, and the exclusions are defined by what you actually do, not by how your registration is worded. Discovering the problem during an audit means recalculation at 20% for the whole period.

How the exclusion works

The Tax Code and accompanying government resolutions define categories of activity that are barred from small business status. If your business falls into one, you cannot hold the status — and if you take on such work while holding it, the status can be withdrawn.

The test is substantive. A registration that says "IT services" does not protect you if the actual work is advisory consulting. Conversely, a broadly worded registration does not disqualify you if the real activity is fine.

Categories that are typically excluded

  • Activities requiring a licence or permit. Broad category covering regulated sectors generally.
  • Currency exchange operations and various financial intermediation.
  • Medical practice.
  • Architectural and, in some readings, engineering design services.
  • Legal services and notarial activity.
  • Audit and accounting services.
  • Consulting and advisory services.
  • Gambling and games of chance.
  • Production of excisable goods.
  • Staffing and labour supply.

This list reflects the categories most commonly cited, but the authoritative wording is in the Tax Code and the relevant government resolution, and it has been amended over time. Verify the current list against matsne.gov.ge or with the Revenue Service before relying on it.

The consulting problem

"Consulting" is where most remote workers get into trouble, because it is genuinely ambiguous and it is how a lot of freelance work is casually described.

Consider the difference:

  • Generally fine: writing software to a specification, building and delivering a website, producing design assets, translating documents, writing content, managing infrastructure under a support contract. You are producing a deliverable.
  • Likely a problem: advising a client on strategy, reviewing their architecture and recommending changes, providing expert opinion, coaching. You are supplying judgement.

The distinction that matters is between producing something and advising someone. Many real engagements contain both, which is exactly why this needs a professional opinion on your specific contracts rather than a rule of thumb from an article.

Two practical points:

  1. Your contracts and invoices are evidence. If the deliverable is software but every invoice says "consulting services", the paperwork argues against you. Describe what you actually deliver.
  2. Ask before you sign, not after you have been paid. Reclassification is retroactive.

Mixed activities

If part of your work is excluded and part is not, do not assume the good part is safe. Depending on the circumstances, an excluded activity can jeopardise the status for the entire business rather than just that revenue stream. If you want to run both, the usual answer is separate structures — an IE for the eligible work and a company for the rest.

Checking your own position

  1. Write down what you actually do, in plain terms, as a client would describe it — not as your registration describes it.
  2. Compare against the current official list, not a secondary source.
  3. Where it is close, get a written opinion from a Georgian accountant or tax lawyer. A few hundred lari now against a twenty-fold rate change later is not a difficult trade.
  4. Re-check when your work changes. Eligibility is not decided once at registration; it is a continuing condition.

Next steps