Georgia’s 1% Tax Regime: A guide to Individual Entrepreneur and Small Business Status
- ibccstax
- Sep 3
- 4 min read
Georgia is known for its attractive tax system and simple business regulations, which make it an increasingly popular jurisdiction for entrepreneurs. One of the most efficient ways for individuals to operate a business here is through the Individual Entrepreneur (IE) model, with the possibility of applying for Small Business Status (SBS). This combination offers both simplicity in setup and significant tax advantages.
Individual Entrepreneur (IE) in Georgia - The Simplest Business Setup
An Individual Entrepreneur is the most straightforward form of business activity for a sole proprietor. It allows a person to legally provide services or carry out commercial activity without establishing a company, such as an LLC.
Key feature:
Accessibility - both Georgian residents and non-residents can register as an IE
Flexibility - services can be provided from and within Georgia
Remote setup - registration and opening a bank account can be completed remotely through a power of attorney
Small Business Status in Georgia - 1% Tax Regime Explained
The Small Business Status is a special tax regime available to Individual Entrepreneurs.
Holders of SBS are taxed at only 1% of their gross turnover, provided that:
Annual turnover does not exceed 500,000 GEL, and
The activity is not included in the official list of restricted business activities
Without SBS, Individual Entrepreneurs are subject to the standard 20% income tax on net profit.
Additional Tax Advantages for Entrepreneurs in Georgia:
VAT relief - services delivered to foreign clients are typically exempt from VAT
No residency requirement - legal residency or Georgian citizenship is not required to register as an IE or obtain SBS
Cryptocurrency profits - income derived from the sale of cryptocurrencies is not subject to tax in Georgia
These incentives make SBS one of the most advantageous frameworks for small-scale entrepreneurs in the region.
Georgian Tax Residency and Double Taxation Rules
While it is possible to register as an Individual Entrepreneur and obtain Small Business Status in Georgia without being a tax resident, in practice, it is highly recommended to consider Georgian tax residency.
Why does it matter?
Tax residency ensures clarity - if you are a tax resident of Georgia, your income is taxed only in Georgia (depending on Georgia’s tax treaties)
Avoiding double taxation - if you remain a tax resident of another country, the authorities there may still consider your worldwide income taxable, even if you pay 1% in Georgia.
Eligibility for treaty benefits - becoming a Georgian tax resident allows you to rely on Georgia’s network of double taxation treaties, which can significantly reduce the risk of additional taxation abroad.
In most cases, Georgian tax residency is obtained by spending at least 183 days per year in the country, or by proving that your main economic interests are located in Georgia.
How to Register as an Individual Entrepreneur and Apply for SBS in Georgia
To register as an individual Entrepreneur and apply for SBS, the following are required:
Valid passport of the applicant
Description of intended business activities
Legal business address in Georgia (either owned or used with the consent of the owner)
Georgian phone number and email address
The registration process is usually quick and can be completed in one visit to the Public Service Hall. Remote registration is also possible under a notarized power of attorney.
Why Choose Georgia for Business - Tax and Regulatory Benefits
Georgia’s tax system is designed to support business activity with minimal bureaucracy and low effective tax rates. The IE and SBS regime is a prime example, offering one of the most entrepreneur-friendly frameworks in the region.
Professional Support for Registering and Managing Your Business in Georgia
Starting a business in a new country can feel complicated, but with the right support, it becomes much easier. At IBCCS TAX Georgia, we make sure that the process is smooth and stress-free.
We can:
Prepare and submit all documents on your behalf
Help with providing a legal business address and opening a bank account
Guide you on tax residency and double taxation rules
Support you with ongoing accounting, tax, and legal advice
Our goal is simple - to let you focus on growing your business while we take care of the formalities.
Contact us today to start benefiting from Georgia’s 1% tax regime with full professional support.
FAQs about Doing Business and Taxes in Georgia
How much tax do entrepreneurs pay in Georgia?
Entrepreneurs with Small Business Status pay only 1% tax on turnover up to 500,000 GEL per year.
Can foreigners open a business in Georgia?
Yes. Foreigners can register as Individual Entrepreneurs or set up a company in Georgia without needing Georgian citizenship.
Is Georgia a tax-friendly country for business?
Yes. Georgia is considered one of the most business-friendly countries, with low taxes, simple regulations, and no tax on cryptocurrency profits.
What is the easiest way to start a business in Georgia?
The simplest way is to register as an Individual Entrepreneur (IE), which can be done quickly and even remotely with a power of attorney.
Do I need to live in Georgia to benefit from the 1% tax regime?
No, residency is not required. However, becoming a tax resident of Georgia may help avoid double taxation and secure treaty benefits.
What businesses qualify for the 1% tax regime in Georgia?
Most service-based businesses and freelancers qualify, provided the turnover is under 500,000 GEL and the activity is not restricted.
Why do entrepreneurs choose Georgia for business?
Entrepreneurs choose Georgia for its 1% tax regime, VAT exemptions, crypto-friendly rules, and easy company registration process.