Georgia's 1% Tax in 2026: What Changed and Who Can't Use It

Overview

Since March 7, 2026, Small Business Status starts the day you apply. You no longer wait for the first of the next month.
A missed monthly return now counts as a tax offense with a fine, even when you earned nothing.
If your status is revoked, you can't reapply until the next tax year.
Consulting, legal, medical, architectural and audit work, among others, still can't get the 1% rate.

Georgia's 1% tax on turnover is the main reason many freelancers register a business here. The regime survived 2026, but the rules around it changed. Some changes help you. Others can cost you a fine or a year at 20% if you don't know about them.

Rules current as of October 28, 2026.

How the 1% rate works

You register as an Individual Entrepreneur, then apply to the Revenue Service for Small Business Status. With the status, you pay 1% of your turnover, not your profit, as long as turnover stays within 500,000 GEL in the calendar year. Above that, the rate becomes 3% from the month you cross the line. Cross it two years in a row and you lose the status.

Only an Individual Entrepreneur can get it. A Georgian LLC can't. If you're still choosing your structure, see Individual Entrepreneur vs LLC.

What changed on March 7, 2026

Same-day activation

Before March 2026, Small Business Status started on the first day of the month after you applied. Income in between was taxed at the standard rate. Now the status starts on the day you apply. Apply on March 20 and income from March 20 is taxed at 1%.

In practice, you can register an IE and get the 1% rate within one working day.

Missed returns cost money

You file a declaration and pay by the 15th of each month. Before March 2026, if you didn't file, the system treated it as a zero return. Not anymore. A missed return is now a tax offense with a fine, even in a month with no income.

This matters most to people who registered an IE, left Georgia and forgot about it. If that's you, either file zero returns, ask to revoke the status or deregister the IE.

No quick second chance

If your status is revoked, you can now reapply only from the next tax year. This hits people who lose the status for doing a banned activity or who give it up and then change their mind.

The 0% micro option

Micro Business Status gives 0% tax on income up to 30,000 GEL, with no staff. Go over 30,000 GEL or hire someone and you lose it. You then have 15 calendar days to apply for Small Business Status. If you do, the 1% rate applies from the day the micro status ended. If you don't, the whole year's income, including the first 30,000 GEL, falls back to the 20% rate.

That gives a sensible path for new freelancers: start on 0%, move to 1% inside 15 days of passing 30,000 GEL.

Who can't use the 1% rate

Small Business Status isn't open to every activity. The excluded list includes:

consulting of any kind, including tax consulting.
legal and notarial services.
audit services.
medical services.
architectural services.
activities that need a license or permit.
currency exchange, gambling and staffing services.

If most of your income comes from an excluded activity, you'll pay the standard 20% on net profit as an IE. Some people try to describe consulting as something else. The Revenue Service looks at what you actually do, and a wrong label can cost you the status for the rest of the year.

Two things the 1% rate doesn't cover

VAT. Small Business Status doesn't remove VAT. If your taxable supplies pass 100,000 GEL in any 12 months in a row, you may have to register for VAT. That test is separate from the 500,000 GEL limit, and services sold to foreign clients have their own place-of-supply rules.

Your home country. The 1% is what you owe Georgia. If you're a US citizen, you still file with the IRS, and the 1% rate doesn't remove US self-employment tax. If you're from the UK, Canada or Australia, you may still be tax resident at home. Check before you rely on the rate.

The work permit link

Since March 1, 2026, a foreigner who runs an IE in Georgia generally needs a self-employed work permit. That permit has its own test: 50,000 GEL of turnover over the last 12 months, unless the business is less than 3 months old. A lot of freelancers registered for the 1% rate without knowing this. See our guides on the work permit deadline and remote work.

A checklist for 2026

Check that your activity isn't on the excluded list before you register.
Apply for Small Business Status the same day you register the IE.
Put the 15th of every month in your calendar. File even when income is zero.
Watch the 30,000 GEL line if you're on micro status, and the 100,000 GEL VAT line.
Sort out your work permit if you run the IE from Georgia.
If you leave Georgia for good, deregister. Don't leave an IE open and unfiled.

How we can help

We register your IE, apply for Small Business Status, check your activity against the excluded list and handle the monthly returns. We also handle the work permit if you need one. Ask about setup or ask about tax.