Is my activity eligible for small business status: what to do under Georgian law

What to do

1. Who may apply: only an individual entrepreneur, not an LLC (Tax Code of Georgia, Art. 88). The entrepreneur applies to the tax authority, which issues a small business certificate (Art. 89). Employment cannot be placed under the special regime: only income from a Georgian source is taxed, and salary is not included (Art. 90).
2. Activity ban: the government may prohibit activities for which the status is not granted (Art. 88). Their list is Appendix No. 4 to the Government Resolution on Special Taxation Regimes (Art. 1). It includes activities that require a licence or permit, except taxi in the capital (Art. 1). Check the remaining items against the current version, and qualify activity by the content of the services (contracts, invoices), not by its name.
3. Income outside the special regime: the government also determines income that is outside the special regime and not included in aggregate income (Art. 88). These include construction services provided to an enterprise, organisation or individual entrepreneur (Government Resolution on Special Taxation Regimes, Art. 1), which are taxed under the general rules.
4. Resolve doubts in advance: a preliminary ruling of the Revenue Service on a transaction must be issued no later than 90 days from the request (Art. 47). If you act on that ruling, additional tax cannot be assessed contrary to it (Art. 47).
5. The cost of an error: for a prohibited activity the status is cancelled from the beginning of the current year (Art. 89), which means recalculation under the general regime. The regime itself: rate 1%; above 500,000 lari per year, 3% (Art. 90). Declaration and payment are monthly, by the 15th of the following month (Art. 93).
6. Where to apply: Revenue Service (rs.ge) for status, certificate and preliminary ruling.
7. Evidence: contracts and invoices describing the services, any licence or permit, the entrepreneur registration extract.
8. Traps: relying on lists from blogs (the government changes the list); describing development or design as 'consulting' in contracts, or the reverse; expecting the status for an LLC, or 1% on salary; treating construction services to companies as small business income.

Be sure to check

• status is only for individual entrepreneurs, granted on application to the Revenue Service (certificate)
• prohibited activities are set by the government (annex to the special regimes resolution); licensed activity is prohibited
• qualification by the actual content of the activity; in case of doubt, a preliminary ruling of the Revenue Service, which binds the tax authority
• prohibited activity leads to cancellation of the status from the beginning of the current year
• rate 1% (3% above the threshold) and a monthly declaration by the 15th