The micro business status is awarded to individuals who are registered as taxpayers. Although being registered as an entrepreneurial individual is not mandatory to qualify for micro business status, individuals who meet the following criteria may be eligible for this status:
not being registered as a VAT payer;
not employing anyone outside of their family to carry out business operations;
independently participating in economic activities, with a total income that doesn't surpass 30,000 GEL within the calendar year.
To obtain micro business status, an individual should file an electronic application via the Revenue Service website at www.rs.ge. Afterward, the tax authority will review the application, and if it meets the criteria, a micro business certificate will be issued in a timely manner.
⛔️ Prohibited Activities
Activities that are not allowed for individuals with micro business status include:
Engaging in activities that demand licensing or authorization, except for transportation activities within the capital of Georgia using a light vehicle (M1 category) such as taxis;
Pursuing activities with the potential to generate income exceeding 30,000 GEL during the calendar year;
Conducting currency operations;
Practicing professions in the medical field (except for medical activities performed by village doctors and state program-affiliated nurses), architectural, legal, notarial, auditing, consulting (including tax consultants), or any related services;
Involvement in the gambling business;
Engaging in trade, unless the individual is involved in the production, purchase, or processing of goods.
✅ Permissible Additional Activities
Individuals with micro business status can earn supplementary income beyond the activity that falls under the special regime, as defined by the Government of Georgia's decree. This additional income is not subject to taxation under the special regime and is not considered part of micro-business operations. Instead, it is taxed in the regular manner. These types of income encompass:
Income received from leasing or renting real estate;
Income from lending;
Profits generated from gaming businesses;
Income received as gifts;
Additional income acquired from the sale of real estate, vehicles, or securities;
Income received through inheritance;
Income obtained as dividends;
Income earned in the form of interest;
Income acquired as royalties;
Income derived from debt forgiveness.
📌 VAT Status
It is not possible to grant micro business classification to an individual who is already registered as a VAT payer. Furthermore, registering as a VAT payer is the basis for revoking micro business classification.
📌 Is it mandatory for an individual with micro business status to submit an annual income tax return?
Yes, individuals holding micro business status are obligated to file an annual income tax declaration with the tax authority by April 1st of the following fiscal year.
📌 Can a natural person with micro business status hire someone else to assist in their economic activities?
A person with micro business status is not allowed to hire anyone other than a family member to help with their economic activities.
📌 Is a natural person with micro business status required to withhold taxes when paying for services, such as rental services?
No, an individual with micro business status is not obligated to withhold taxes at the source of payment for services received. However, if compensation is received from a non-resident individual for services rendered, the micro business must apply VAT to the transaction in accordance with the withholding tax regulations outlined in the Tax Code of Georgia.
📌 If an individual opts to transition from a different tax system to the micro business tax system within the same calendar year, how will their income be taxed?
When an individual switches to the micro business taxation system during a calendar year, the taxation of their income depends on the timing of the transition. If the individual acquires micro business status or transitions to the micro business taxation regime within the current accounting year, any income earned before obtaining micro business status will be taxed according to the method previously applicable to them. However, income earned after receiving micro business status will be subject to taxation under the special regime designated for micro businesses. Additionally, the individual will no longer be obligated to make current tax payments once they have acquired micro business status.
📌 Is it necessary for an individual with micro business status to have a cash register?
No, individuals holding micro business status are not required to use cash registers, as per the Tax Code of Georgia.
📌 Under what circumstances can micro business status be revoked?
Micro business status of an individual can be revoked under the following circumstances:
The individual submits a written request to the tax authority to cancel the micro business status or to grant small business status.
The tax authority conducts an inventory and discovers that the physical stock balance of the individual with micro business status exceeds 45,000 GEL.
The individual engages in activities prohibited for micro businesses.
The individual hires a non-family member.
The individual is required to register for VAT.
The total income of the individual with micro business status during the calendar year exceeds 30,000 GEL, as specified in Decree N999 of December 31, 2010, by the Minister of Finance of Georgia, Article 8.
📌 What are the repercussions for an individual if they participate in activities prohibited for micro businesses?
If an individual with micro business status engages in activities that are prohibited for micro businesses, the tax authority has the authority to revoke their micro business status, leading to their exclusion from the special taxation regime. Additionally, the individual may even face a fine of 500 GEL.
📌 What should an individual with micro business status do if their total combined income exceeds 30,000 GEL or if they begin employing labor?
If the total combined income of an individual with micro business status surpasses 30,000 GEL or if they commence hiring labor, they must promptly apply to the tax authority for obtaining small business status within 15 calendar days from the time the threshold is exceeded. Neglecting to take this action will lead to the automatic revocation of micro business status and exemption from the special taxation regime.
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