As many of our readers are aware, 2026 has brought major changes to Georgian legislation regarding labour migration. Although the new Right to Work appears fairly straightforward to obtain in practice, it has, for obvious reasons, captured the attention of all expat workers and entrepreneurs in Georgia.
Amid changes of this magnitude, it is easy to overlook smaller, less conspicuous legislative updates affecting popular business structures and practices. Yet these updates are no less important.
This article reviews the recent changes made to Georgia’s popular tax regimes, including the Small Business status for Individual Entrepreneurs. If you are already benefiting from one of these regimes, this article is for you. If you have not yet established a setup in Georgia, our extensive archive of content can help you decide which option is best suited to your needs.
Recent Amendments to Georgia’s Preferential Tax Regimes
On February 5th, 2026, the Ministry of Finance approved a package of amendments to Order No. 999 on the Use of Special Taxation Regimes. This governs:
- Individual Entrepreneurs (IE) with Small Business Status (SBS)
- Micro Business Status (MBS)
- Fixed Taxpayer Status (FTS)
The new rules went into force on March 7th, 2026.
Small Business Status (SBS): Immediate Activation of the 1% Tax Regime
Previously, Small Business Status for Individual Entrepreneurs became active on the first day of the month following the month of registration. This created inconvenience, especially for freelancers who applied at the beginning of a month, as they had to wait almost a full month to access the 1% regime. In some cases, income earned after IE registration and before SBS activation was subject to 20% standard income tax.
Under the new rules, Small Business Status becomes effective on the date the request is submitted to the Revenue Service.
Example:
If an Individual Entrepreneur submits a request to the Revenue Service for Small Business Status on March 20th, the status will be deemed effective as of March 20th. Consequently, March will be the first accounting period for that individual. As a result, any income this individual receives starting from March 20th will be taxed at just 1%.
This means you can come to Georgia, register your business within 1 business day, and gain immediate access to the 1% tax regime.
Mandatory Monthly Declarations
Previously, SBS holders were not obligated to file the monthly income tax return in case their turnover was zero. This was because the absence of a filing was treated as the submission of a zero return.
Under the new rules, this has changed. Failure to file a monthly tax return by an SBS-holder no longer equates to submitting a zero return. Accordingly, not submitting a tax report now qualifies as a tax offense, subject to a fine. This is so even where the SBS holder’s income is zero.
This change mainly affects individuals who registered as Individual Entrepreneurs and obtained Small Business Status, later ceased operations from their Georgian businesses, and left their IE/SBS registration dormant.
Affected individuals now have three options:
- Submit zero returns every month
- Request revocation of Small Business Status
- Proceed with full deregistration of their business
To avoid any potential issues in the future, if you plan on ceasing your business activities in Georgia entirely, proceed with the termination of your business altogether. This will help protect you from similar legislative changes that may affect you in the future.
Re-Application for Small Business Status After Revocation
The rules regarding re-application for SBS have also slightly changed.
Under the new regulation, a taxpayer whose Small Business status has been revoked is entitled to reapply for the status and obtain it from the tax year following the year in which the status was revoked.
Previously, re-application within the same calendar year was allowed in most cases.
This change primarily affects individuals whose SBS was revoked due to reasons other than exceeding the 500,000 GEL annual turnover threshold twice in a row. Such reasons include prohibited activities and voluntary revocation.
With these new regulations in place, individuals who have temporarily paused their business activities in Georgia and are planning to resume operations in the future may want to consider submitting zero monthly tax returns instead of fully deregistering.
Changes to the Micro Business Status (MBS)
Several technical and clarifying amendments were introduced regarding Micro Business Status.
If an MBS revocation event is triggered (for example, exceeding 30,000 GEL in income or employing staff) and the status holder fails to apply for SBS within 15 calendar days, income earned prior to SBS activation in the same tax year becomes subject to 20% standard income tax
If you hold an MBS and are about to exceed the 30,000 GEL annual threshold, the only way to secure the 0% tax treatment on your initial 30,000 GEL of income is to transition to Small Business Status within 15 calendar days. Otherwise, failing to make the transition will result in your income becoming subject to the standard 20% tax rate, including the portion earned within the 30,000 GEL limit.
The updated rules also clarify that if SBS is requested within 15 days of Micro Business revocation, SBS is considered effective from the Micro Business revocation date.
Example:
If you exceeded the 30,000 GEL threshold and applied for SBS 14 days later, your SBS will be effective from the same day your Micro Business Status was revoked. This avoids any gap period (a period between the MBS revocation and SBS application) and prevents income during that period from being taxed at 20%.
Smart Structure for Freelancers Starting from Zero
For freelancers starting their business journey and unsure about expected turnover, the optimal structure can be the following:
- Start with Micro Business Status (0% tax up to 30,000 GEL)
- If you exceed 30,000 GEL, apply for Small Business Status within 15 days
This secures:
- 0% tax on the first 30,000 GEL
- 1% tax on income earned after exceeding 30,000 GEL
This structure allows freelancers to scale gradually without sudden exposure to standard taxation.
Fixed Taxpayer Status (FTS)
Fixed Taxpayer Status is another preferential tax regime available to individuals. However, it is not as widely used as Small Business Status and Micro Business Status.
Fixed Taxpayer Status applies to certain predefined activities, including tone ovens and beauty salons.
Under this regime:
- A fixed monthly tax between 1 and 2,000 GEL may apply regardless of income. (The government determined the tax amount, which usually falls within a 100 GEL range.)
- Alternatively, the government may impose a 3% tax on specific activities.
The recent amendments clarify that Individual Entrepreneurship registration is mandatory in order to obtain a Fixed Taxpayer Status.
Main Takeaway
The updates to the law on preferential regimes come at a time of broader legislative change. These amendments do not constitute material structural reforms or significantly alter the usability of the regimes; they are nonetheless important. It is also reassuring to see that the Government continues to maintain these regimes. This is a testament to their longevity and ongoing relevance.
How Can ExpatHub Help?
Some of the assistance ExpatHub can provide in light of the new changes are:
- Accounting services for mandatory monthly declarations.
- Full deregistration for those who don’t plan on resuming business activities in Georgia.
- Alternatively, voluntary revocation of your Small Business Status.
If you need help with any of the above, please don’t hesitate to contact us.
If you wish to discuss these or other topics, you can schedule a consulting session with us here.
