Micro Business Status in Georgia (0% Tax)

Micro Business Status is one of Georgia’s special tax regimes and offers the most favourable tax treatment for small-scale economic activity. It is designed for individuals who carry out economic activity personally, without hired labour, making it suitable for one-person businesses.

For freelancers, artisans, independent creators and people testing a business idea, the regime provides a simple way to operate legally with minimal administrative requirements and a 0% income tax rate, provided the statutory conditions are met.

Who may obtain it

Micro Business Status may be granted to a natural person who is registered as a taxpayer. Registration as an Individual Entrepreneur is not required to obtain the status.

To qualify, a person must generally satisfy two conditions:

• No hired labour. The person must carry out the economic activity personally, without employing other individuals.
• Turnover limit. Expected gross income during the calendar year must not exceed GEL 30,000, except where the law provides otherwise for certain activities or types of income.

In essence, the regime is built around three principles: personal work, small-scale activity, and limited turnover.

The GEL 30,000 rule: important, but not absolute

As a general rule, a person remains within the regime as long as gross income from qualifying economic activity during the calendar year does not exceed GEL 30,000. The law provides two important exceptions:

• Certain government-defined activities are not subject to the GEL 30,000 limit. Income from these activities may still fall within the Micro Business Status regime (see the list at the end of this guide).
• Certain types of income are not treated as micro business income. They are not counted towards the GEL 30,000 limit but are taxed under the ordinary rules.

As a result, a person with Micro Business Status may simultaneously receive:

• income taxed under the Micro Business Status regime;
• income that is excluded from the regime, taxed under the ordinary rules and not counted towards the GEL 30,000 limit; and
• income or carry out activities that may lead to cancellation of the status.

Micro Business Status does not make all income tax-free. The exemption applies only to the categories of income that the law treats as micro business income.

Taxation of qualifying income

Income covered by Micro Business Status consists of qualifying income from economic activity. This includes:

• income from economic activity within the GEL 30,000 annual threshold; and
• income from certain government-defined activities to which the GEL 30,000 threshold does not apply.

Such income is taxed under the Micro Business Status regime and is exempt from personal income tax (0%), provided the activity is not excluded by law and the income is not employment income (salary).

Tax regime	Annual threshold	Income tax	Hired labour	Suitable for
Micro Business Status	GEL 30,000*	0%	No	Entrepreneurs working personally
Small Business Status	GEL 500,000 / 700,000**	1%	Yes	Small and growing businesses
Ordinary taxation	No special threshold	20%	Yes	Businesses not eligible for a special tax regime

** Subject to the statutory exceptions explained below. Certain government-defined activities are not subject to the GEL 30,000 annual income limit.

** The general threshold is GEL 500,000. A higher threshold of GEL 700,000 applies to qualifying wine tourism and agritourism activities.

For the ordinary income tax rules and the sourcing of income, see Personal Income Tax in Georgia. Whether Georgia taxes your income at all depends on your tax residency.

Prohibited activities

Micro Business Status is not available for every activity. If a person carries out an activity that is prohibited under the Micro Business Status regime, the Revenue Service may refuse to grant the status or cancel it.

The following activities are prohibited for Micro Business Status:

1. Activities requiring a licence or permit, except the activity provided for in the Law of Georgia On Licences and Permits (the Category M1 taxi permit for the capital).
2. Activities from which income received during a calendar year may exceed GEL 30,000.
3. Carrying out foreign-exchange operations.
4. Medical activity (except medical activity carried out by a village doctor or nurse/paramedic participating in the state programme), architectural, advocacy or notarial, auditing, and consulting activities (including tax consulting).
5. Gambling business.
6. Trade.

Exception: Item 6 does not apply where the activity consists of processing purchased goods and supplying the processed goods.

A VAT payer cannot hold the status

A person registered as a VAT payer is not eligible for Micro Business Status. If a person becomes registered as a VAT payer, their Micro Business Status is cancelled in accordance with the law.

How the status is granted

A person applies to the tax authority for Micro Business Status. If already registered as a taxpayer, they submit an application for the status. If not yet registered, they may apply simultaneously for tax registration and Micro Business Status.

If the application is approved, the tax authority issues a Micro Business Status certificate. The status takes effect from the date specified in the application, provided that date is not earlier than the date on which the application was registered with the tax authority.

Reporting and documentation

Although Micro Business Status significantly simplifies tax compliance, holders must still comply with certain reporting and record-keeping requirements.

• No advance income tax payments. Instead, the holder files an annual personal income tax declaration by 1 April of the following year.
• Primary tax documents. At the request of the buyer, the holder may issue a primary tax document for goods or services, indicating their Micro Business Status and certificate number.
• Record retention. Tax documents must be retained for 3 years, calculated from the end of the calendar year in which the relevant tax liability arose.
• Cash registers. Micro businesses are generally exempt from the obligation to use a cash register, although the Government may prescribe exceptions for certain activities or municipal areas.
• Reverse-charge VAT. Where a holder receives services from a non-resident, they may still become liable to account for VAT under the reverse-charge mechanism, even though they do not generally act as a withholding agent.

When the status is cancelled

Micro Business Status is cancelled in the following circumstances:

• Voluntary cancellation requested by the taxpayer.
• Use of hired labour.
• Carrying out a prohibited activity.
• Mandatory VAT registration.
• Exceeding the applicable income threshold.
• Exceeding the permitted inventory level.
• Death of the individual.

If the status is cancelled, the individual may generally apply for Micro Business Status again from the following tax year. If the application is approved, the tax authority issues a new Micro Business Status certificate with a new registration number.

What happens if the business grows

If a person no longer qualifies for Micro Business Status—for example, because the applicable income threshold is exceeded—they may apply for Small Business Status, provided they satisfy the statutory conditions. Under that regime, qualifying income is generally taxed at 1% of turnover, with an annual income threshold of GEL 500,000 for most activities.

Some activities are instead covered by Fixed Taxpayer Status. If your activity is one of those listed by the Government, such as hairdressing or car repair, that regime may apply instead.

Activities exempt from the GEL 30,000 annual income limit

The following activities are not subject to the GEL 30,000 annual income limit, provided the statutory conditions are met:

1. Growing of agricultural products carried out by means of tractors or combine harvesters.
2. Production of carpets and rug-like products.
3. Production of pullovers and similar articles.
4. Production of outerwear, except the demonstration and display of models.
5. Production of underwear.
6. Production of headgear.
7. Production of other clothing and accessories.
8. Production of various wooden products.
9. Production of wooden hangers for clothing and headgear.
10. Production of wooden household articles and kitchen utensils.
11. Production of porcelain and ceramic household articles.
12. Production of household utensils and equipment.
13. Production of musical instruments.
14. Production of accordions and similar instruments, including mouth harmonicas.
15. Production of wind musical instruments.
16. Production of brooms and brushes.
17. Repair of household goods and personal-use articles.
18. Repair of household goods and personal-use articles, where it is carried out independently from the production, wholesale trade or retail trade of those articles. If the repair is carried out together with other types of activity, it shall be classified under the corresponding groups of wholesale trade, retail trade or the production of those goods.
19. Repair of footwear and leather goods.
20. Repair of household electronic products.
21. Repair of watches and jewellery.
22. Alteration and repair of clothing.
23. Repair of household goods and personal-use articles.
24. Washing and treatment of linen and other textile products.
25. Household management services.

Note: The GEL 30,000 limit on the total gross income receivable during a calendar year, established for natural persons holding Micro Business Status, shall not apply to the above activities if the natural person independently carries out the economic activity, does not use hired labour, and personally carries out the production and retail supply to the final consumer of the goods and/or services listed above.

Income excluded from the Micro Business Status regime

1. Income received from leasing property / renting out immovable property.
2. Income received from granting a loan.
3. Profits received from the gambling business.
4. Income received by way of gift.
5. Excess income received from the disposal of:
   a) immovable property;
   b) a motor vehicle;
   c) securities.
6. Income received in the form of property received by inheritance.
7. Income received in the form of dividends.
8. Income received in the form of interest.
9. Income received in the form of royalties.
10. Income received through forgiveness of debt.

A note on verification

Micro Business Status is one of Georgia’s longest-standing special tax regimes and its core principles have remained stable for many years. Nevertheless, the detailed rules—particularly the lists of prohibited activities, activities exempt from the GEL 30,000 annual income limit, and types of income excluded from the regime—are established by subordinate legislation and may be amended from time to time.

Before relying on this guide, verify that the applicable legislation and administrative practice remain unchanged, including the income thresholds, excluded activities, reporting obligations and administrative procedures.

Frequently asked questions

What is the tax rate under Micro Business Status?

Qualifying income under the regime is exempt from personal income tax — effectively 0%. The exemption applies only to income covered by the micro business regime; it does not make all of a person's income tax-free.

What are the main conditions?

The individual must not employ hired labour, and expected total gross income from qualifying economic activity during the calendar year must not exceed GEL 30,000. The activity must also be compatible with the regime — some activities are prohibited outright, and a VAT payer cannot hold the status. Registration as an Individual Entrepreneur is not mandatory to obtain micro business status.

What happens if my income exceeds GEL 30,000?

The business can transition to Small Business Status, under which income up to GEL 500,000 per year is taxed at 1% of turnover. This lets a person start under the 0% micro regime and grow gradually without facing heavy taxation at the early stage.

Does the GEL 30,000 limit apply to all income?

No. There are two exceptions. Certain government-defined activities (mostly small-scale personal production and repair supplied to final consumers) are not subject to the GEL 30,000 cap. And certain income types — such as rent, interest, dividends, royalties and property gains — are not treated as micro business income at all: they do not count toward the limit and are taxed under the ordinary rules.

What reporting is required?

A micro business holder pays no current tax during the year but must still file an annual personal income tax declaration by 1 April of the following year. Micro businesses are generally exempt from cash-register requirements, and tax documents must be kept for 3 years from the end of the relevant tax year.