What Should You Know About Micro Business Status?

To obtain Micro Business Status in Georgia, it is not mandatory for an individual to register as an entrepreneur. The status may be granted to a natural person who is registered as a taxpayer, except in cases where the person carries out activities prohibited for micro businesses.

Micro Business Status may be granted to an individual who:

• Is not registered as a VAT payer;

• Does not employ hired labor;

• Independently carries out economic activities;

• Earns no more than GEL 30,000 during a calendar year, except in cases where this threshold does not apply to a specific activity or where the income is taxed

• under the general taxation rules.

1. Activities Exempt from the GEL 30,000 Threshold

There are certain activities for which the income received is not included in the GEL 30,000 threshold and, when carried out independently, is not subject to taxation. Examples include:

• cultivation of agricultural products using tractors and combines;

• production of carpets and similar woven products;

• repair of household electronic appliances;

• washing and processing of linen and other textile products;

• household maintenance services and others.

For the full list, see: Government of Georgia Decree No. 415(December 29, 2010, Annex No. 1)

2. Activities That Exclude Eligibility for Micro Business Status

Micro Business Status will not be granted to a person engaged in:

• licensed activities

  
  

  (except activities carried out under a Tbilisi taxi permit);

• activities from which the income may exceed GEL 30,000;

• currency exchange operations;

• medical, legal, notarial, audit, or consulting services;

• gambling activities;

• trading activities.

For the full list, see:

Government of Georgia Decree No. 415(December 29, 2010, Annex No. 2)

3. Income Not Included in the GEL 30,000 Threshold

Certain types of income are not included in the GEL 30,000 annual threshold and are taxed under the general taxation rules. Examples include:

• income from renting out immovable property;

• income from issuing loans;

• dividends;

• interest;

• royalties;

• property received as a gift or inheritance;

• capital gains from the sale of immovable property, vehicles, or securities;

• income received through debt forgiveness and others.

See:

Government of Georgia Decree No. 415(December 29, 2010, Annex No. 3)

In What Cases Will Micro Business Status Be Revoked?

Micro Business Status will be revoked if:

• the individual personally applies to the tax authority requesting cancellation of the status or granting of Small Business Status;

• an inventory inspection conducted by the tax authority establishes that the balance of inventory exceeds GEL 45,000;

• the individual carries out activities prohibited for micro businesses.

It should be noted that if a person holding Micro Business Status engages in a prohibited activity, the tax authority will revoke the status, the individual will exit the special taxation regime, and additionally, the person will be fined GEL 500.

• the individual hires employees (except family members);

• the obligation for mandatory VAT registration arises;

• total annual income exceeds GEL 30,000 during the calendar year;

• the individual passes away.

If during the current year the individual loses Micro Business Status and is not granted Small Business Status, the income earned during the reporting year will be taxed under the general personal income taxation rules.

See: Government of Georgia Decree No. 415(December 29, 2010, Annex No. 3)

Additional information:

Order No. 999 of the Minister of Finance of Georgia (December 31, 2010) — Article 8

Submission of Declaration

An individual holding Micro Business Status is required to submit an annual personal income tax declaration to the tax authority no later than April 1 of the year following the reporting year.