Georgia offers several regimes for small operators, and the right one depends on turnover, margins and whether you employ anyone. Choosing badly is expensive in both directions — paying 1% of turnover on a thin-margin trading business can cost more than 20% of profit.
The options at a glance
| Micro business | Small business | Standard IE | |
|---|---|---|---|
| Rate | 0% | 1% of turnover | 20% of taxable income |
| Turnover ceiling | ₾30,000 | ₾500,000 | none |
| Employees | not permitted | permitted | permitted |
| Expenses deductible | n/a | no | yes |
| Filing | annual | monthly | annual |
| Excluded activities | yes | yes | no |
All three sit on top of the same Individual Entrepreneur registration — see how to register. VAT is a separate obligation that applies to all of them once turnover crosses ₾100,000 over a rolling 12 months.
Micro business
A 0% rate, capped at ₾30,000 of annual turnover, and you cannot employ anyone. It suits a genuinely small operation — a side business, a single-person craft or service practice below the ceiling.
The ceiling is the catch. ₾30,000 is roughly ₾2,500 a month, and crossing it means transitioning mid-year. If you expect to grow past it, starting on small business status avoids a disruptive switch.
Small business
1% of turnover up to ₾500,000, with 3% on the excess above that — covered in the turnover limit guide. Employees are allowed. Filing is monthly, which is more administration than the alternatives but is a ten-minute job once the routine is set.
The defining feature is that expenses are irrelevant. That is enormously favourable for high-margin service work and actively bad for low-margin trading.
Standard regime
20% on taxable income, with expenses deductible. No activity exclusions, no turnover ceiling. This is the default if you register an IE and never apply for a special status — a state a surprising number of people occupy by accident.
It becomes the right answer when margins are thin, or when your activity is on the excluded list and the special regimes are unavailable.
Where the crossover sits
1% of turnover equals 20% of profit when net margin is 5%. That single number decides most cases:
| Net margin | Better regime | Why |
|---|---|---|
| Above 5% | Small business | 1% of turnover < 20% of profit |
| Exactly 5% | Either | identical tax |
| Below 5% | Standard | 1% of turnover > 20% of profit |
Worked through: a developer with ₾120,000 of revenue and ₾10,000 of costs has a 92% margin. Small business tax is ₾1,200; the standard regime would be ₾22,000. A reseller with ₾120,000 of revenue and ₾110,000 of cost of goods has an 8% margin — ₾1,200 against ₾2,000, still favouring small business, but the gap closes fast. At 3% margin the standard regime wins.
Beyond the IE
Above roughly ₾500,000, or when you want liability separation or outside investors, a Georgian LLC becomes worth modelling. Georgia taxes corporate profit on distribution rather than accrual, so undistributed reinvested profit is not taxed as it is earned. That suits a business compounding capital and does not suit one paying everything out to a single owner.
Virtual Zone and International Company statuses offer further reduced rates for qualifying IT and service businesses, with substantially stricter substance requirements. Both are worth professional advice rather than a self-assessment.
How to decide
- Estimate turnover for the next 12 months. Under ₾30,000 and staying there — consider micro business.
- Estimate net margin. Above 5% points to small business; below it, model the standard regime properly.
- Check the exclusions. An excluded activity settles the question regardless of the numbers.
- Check the VAT threshold separately. It applies across all regimes and arrives sooner than people expect.
- Re-check annually. A business that grows or changes mix can outgrow its regime.
Use the calculator to get a real turnover figure from your actual receipts before running any of these comparisons — estimates made from memory are usually wrong in the direction that flatters the current choice.