Tax Obligations of a Small Business in Georgia: What Starts When You Begin Trading
Once an Individual Entrepreneur with Small Business Status begins economic activity, a set of recurring obligations starts running. The core one is a monthly turnover declaration filed by the 15th of the following month, with the 1% tax paid on the same date (3% above GEL 500,000 in a calendar year). Alongside it you keep a special expense journal, and three obligations sit outside the 1% regime entirely: VAT registration becomes mandatory once turnover passes GEL 100,000 in any continuous 12 months — Small Business Status does not exempt you from it — and if you hire staff you must withhold 20% income tax as a tax agent and file for it monthly. Mandatory pension contributions generally do not apply to foreign nationals without permanent residence. This guide sets out what begins, and when, checked against the primary Georgian law.
Last reviewed: 15 July 2026 · Last checked: 28 July 2026
Getting Small Business Status is a one-time event. What follows it is a set of recurring obligations that start the moment you begin economic activity — and the low 1% headline rate hides the fact that several of them have nothing to do with the small-business regime at all. This guide sets out what begins, and when, for an Individual Entrepreneur trading under the status, checked against the primary Georgian law.
If you have not yet set the status up, start with how to register an Individual Entrepreneur and Small Business Status; this page assumes the status is already active.
The obligations at a glance
| Obligation | When it starts | Recurring deadline |
|---|---|---|
| Monthly turnover declaration + pay the tax | From the first month of activity | 15th of the following month |
| Keep the special expense journal | From the start of activity | Ongoing |
| VAT registration, returns and 18% VAT | When turnover passes GEL 100,000 in any continuous 12 months | Register promptly; then monthly returns |
| Withhold 20% income tax as a tax agent | When you first pay salary to an employee | 15th of the following month |
| Property tax declaration (if liable) | If you hold taxable property | Annual, by 15 November |
The rest of this guide takes them in turn.
The core obligation: the monthly declaration
The centre of small-business compliance is a monthly declaration. For every calendar month in which the status is active, you declare the turnover that falls under the regime and pay the tax by the 15th of the following month.
Two features catch people out. First, the filing is monthly, not annual — the older version of the regime used an annual return, and outdated guides still describe it that way. Second, a month with no income is still declared, as a nil return; skipping it because “there was nothing to report” is a filing failure, not a saving.
The tax itself is 1% of the turnover under the regime, rising to 3% once income from economic activity exceeds GEL 500,000 in a calendar year (GEL 700,000 for wine tourism and agritourism). The higher rate applies from the beginning of the month in which the threshold is crossed and runs to year-end; it does not retroactively recalculate the earlier months. The mechanics of the rate, the ceiling and which income falls inside the regime are covered in the Small Business Status guide.
Keeping the expense journal
A small business must keep a special expense journal — a running record of business expenses in the form the Ministry of Finance prescribes. It is a light obligation compared with full double-entry bookkeeping, but it is not optional: it is set by the Tax Code and detailed in Order of the Minister of Finance No 999 (Annex 3).
Alongside the journal, keep the primary documents that evidence your income and expenses:
- invoices you issue to clients;
- receipts and expense vouchers for money you spend;
- contracts with clients and suppliers;
- bank statements for your business account;
- waybills where the Tax Code requires one for the movement of goods.
Retention: the Small Business Status guide states these documents should be kept for 3 years. Some provisions of the Tax Code use a longer period for comparable regimes, so if a long retention matters to you, confirm the exact period for small business with the Revenue Service rather than relying on a single figure.
VAT: the obligation the 1% rate does not remove
This is the part most worth reading twice. Small Business Status does not exempt you from VAT. The status concerns income tax; VAT is a separate tax with its own threshold.
Once your taxable turnover exceeds GEL 100,000 in any continuous 12-month period, VAT registration becomes mandatory. Because that threshold sits well below the GEL 500,000 small-business ceiling, an active and successful small business can cross it while still comfortably inside the 1% regime. When that happens you must:
- apply to register for VAT within the period the Tax Code allows after crossing the threshold;
- charge 18% VAT on your taxable supplies from the point registration takes effect;
- file VAT returns monthly, by the 15th of the following month;
all of this in addition to continuing to pay 1% under the small-business regime. The two run in parallel. Treating the 1% rate as your total tax exposure is the classic and expensive mistake for a growing small business.
If you hire people: the tax-agent obligations
The moment you pay a salary, you take on a second role — tax agent — that is entirely separate from your own 1% tax.
You must withhold personal income tax at 20% from employees’ salaries and pay it over, with the payroll declaration, by the 15th of the following month.
Mandatory funded-pension contributions apply to Georgian citizens and to foreign nationals holding a permanent residence permit (and permanently resident stateless persons). A foreign employee without permanent residence is generally outside the mandatory scheme. Where it applies, the structure is 2% withheld from the employee, 2% paid by the employer on top, and a state co-contribution of up to 2%. The full set of employer duties — quotas, the right to work and reporting — is covered in employing staff in Georgia.
Pension contributions for you personally
As a self-employed foreign national, the mandatory funded-pension scheme generally does not apply to you. The Law on Funded Pension makes participation mandatory for Georgian citizens, foreign nationals with a permanent residence permit and permanently resident stateless persons; a foreign national without permanent residence is generally outside it, and the scheme is in any case built around the employer–employee relationship rather than the self-employed. If pension participation matters to your planning, confirm your own position with the Pension Agency or the Revenue Service rather than assuming.
Property tax
If you own property used in your business — or taxable property generally — property tax may arise. For individuals, taxable property other than land is exempt where household income in the year before the tax year did not exceed GEL 40,000; above that, rates run on a low scale set locally. Where it is due, the annual property tax declaration is filed by 15 November. This is a separate obligation from your small-business tax and is not affected by the status.
Income that falls outside the regime
Not everything you receive is taxed at 1%. Income such as rent, interest, dividends, royalties and gains on the sale of property falls outside the small-business regime and is taxed under the ordinary rules — which, for most personal income, means the flat 20% rate and, where the income is not taxed at source, an annual personal income tax return due by 1 April. The personal income tax guide explains the standard rate and how income is sourced; the list of income types excluded from the small-business regime is in the Small Business Status guide.
A compliance calendar
For a typical small business with one or more employees and VAT registration, the recurring month looks like this:
- By the 15th of each month: small-business turnover declaration and 1% (or 3%) payment for the previous month; VAT return and payment, if registered; payroll declaration, withheld 20% income tax and any pension contributions, if you employ staff.
- Ongoing: maintain the expense journal and keep primary documents.
- By 15 November: property tax declaration, if liable.
- By 1 April: annual personal income tax return for any income taxed outside the regime, if applicable.
Legal sources
This guide is based on the following legislation of Georgia:
| Instrument | What it settles | Document |
|---|---|---|
| Tax Code of Georgia, Chapter XII | The small-business rate, base, declaration and payment | matsne doc 1043717 |
| Tax Code, Articles 157 and 169 | VAT registration threshold and the 18% rate | matsne doc 1043717 |
| Tax Code, Article 154 | Taxation at source — the tax-agent withholding duty | matsne doc 1043717 |
| Order of the Minister of Finance No 999 of 31 December 2010 | The declaration form and the special expense journal | matsne doc 1168081 |
| Government Ordinance No 415 of 29 December 2010 | Prohibited activities and income excluded from the regime | matsne doc 1164635 |
| Law of Georgia on Funded Pension | Who is subject to mandatory pension contributions | matsne doc 4280127 |
A note on verification
We check every figure against the primary source, and the same limit that applies to the Small Business Status guide applies here: on the Legislative Herald, the initial 2010 texts of the special-regime instruments are free, but the consolidated current versions are behind a paywall. The GEL 500,000 / GEL 700,000 thresholds and the 1% / 3% rates therefore come from the amended text, which we cannot read in the free version; we believe them current and they match the Revenue Service’s published guidance, but you should confirm them before relying on them.
The monthly-by-the-15th filing rhythm, the GEL 100,000 VAT threshold, the 18% VAT rate and the 20% withholding rate are the well-established current figures, but exact deadlines can depend on your specific circumstances. This page is information about the law as published — it is not tax advice. Confirm your own obligations with the Revenue Service or a qualified adviser before relying on them.
Frequently asked questions
What is the first tax obligation after I start trading with Small Business Status?
The monthly turnover declaration. For each calendar month in which the status is active, you declare your turnover and pay the tax by the 15th of the following month — even for a month with no income, where you file a nil declaration. The tax is 1% of turnover under the regime, rising to 3% once income exceeds GEL 500,000 in the calendar year (GEL 700,000 for wine tourism and agritourism).
Does Small Business Status exempt me from VAT?
No. This is the single most important point on this page. Small Business Status concerns income tax only. VAT is a separate tax with its own threshold: once your taxable turnover exceeds GEL 100,000 in any continuous 12-month period, VAT registration becomes mandatory, and because the VAT threshold sits well below the GEL 500,000 small-business ceiling, an active small business can cross it. You must apply to register within the period set by the Tax Code, charge 18% VAT from that point, and file VAT returns monthly — all while still paying 1% under the small-business regime.
Do I have to file anything in a month when I earned nothing?
Yes. The monthly declaration is filed whether or not there was income; a month with no turnover is declared as nil. Missing a filing, including a nil one, can attract penalties, so the safe practice is to file every month the status is active.
What must I do if I hire an employee?
You become a tax agent. You must withhold personal income tax at 20% from salary and pay it over, with the payroll declaration, by the 15th of the following month. Mandatory funded-pension contributions apply to Georgian citizens and to foreign nationals holding a permanent residence permit; a foreign employee without permanent residence is generally outside the mandatory scheme. Employing people is a separate compliance layer from your own 1% tax — see the guide on employing staff.
Do mandatory pension contributions apply to me as a foreign self-employed person?
Generally not on a mandatory basis. The Law on Funded Pension makes participation mandatory for Georgian citizens, foreign nationals holding a permanent residence permit and permanently resident stateless persons. A foreign national without permanent residence is generally outside the mandatory scheme. The scheme is built around employer–employee contributions rather than the self-employed, so confirm your own position with the Revenue Service or the Pension Agency before assuming either way.
When is the 1% paid — is there also an annual return?
The tax is paid monthly, on the same date as the monthly declaration (the 15th of the following month). The monthly turnover declarations are the core filing for the small-business regime. If you also have income that falls outside the regime — such as rent, interest, dividends, royalties or property gains — that income is taxed under the ordinary rules and may require a separate annual personal income tax return, due by 1 April. Confirm which returns apply to your mix of income.
Sources
- Tax Code of Georgia — Chapter XII (special regimes), VAT (Art. 157, 169), taxation at source (Art. 154) — Legislative Herald
- Government Ordinance No 415 of 29 December 2010 — On Special Taxation Regimes (prohibited activities, excluded income; Georgian original)
- Order of the Minister of Finance No 999 of 31 December 2010 — On the Application of Special Taxation Regimes (declaration form, expense journal; Georgian original)
- Law of Georgia on Funded Pension (Legislative Herald)
- Revenue Service of Georgia