Georgia’s Tax Revolution
Georgia, nestled at the crossroads of Europe and Asia, has become a haven for freelancers and small business owners seeking ultra-low taxes. As of May 2025 (date when we created this article), the country’s Individual Entrepreneur and Small Business Status programs offer tax rates as low as 1% on gross turnover, with micro businesses enjoying a 0% rate. These incentives are not just for locals—foreigners from over 90 countries, including the US, UK, and EU, can register and operate businesses in Georgia without needing residency or citizenship.
The government’s goal is clear: attract global talent, boost investment, and foster a thriving entrepreneurial ecosystem. This approach has made Georgia a top choice for digital nomads, remote workers, and anyone looking to maximize their income while minimizing tax burdens.
Who Qualifies for Georgia’s 1% Tax Rate?
To benefit from Georgia’s 1% tax regime, your annual business turnover must stay below 500,000 GEL (about $165,000 USD). You must operate as a sole proprietor and avoid prohibited activities like consulting, legal, medical, or gambling services.
Micro Business Status, with a 0% tax rate, is available for those earning under 30,000 Georgian Lari (GEL) annually, but you cannot have employees. Importantly, you do not need to be a Georgian resident or citizen to qualify. However, if your turnover exceeds the threshold, your tax rate jumps to 3% for the remainder of the year, and repeated breaches can revoke your status. The system is designed for genuine self-employed individuals, not disguised employees or those engaged in restricted professions. Always check the latest official lists to ensure your business activity is eligible.
Registration Process: Steps, Timing, and Essential Caveats
Registering as an Individual Entrepreneur in Georgia is straightforward, but timing is crucial. The 1% tax rate applies only from the month after your registration is approved. Any income earned before approval, or before you become a tax resident (typically after 183 days in Georgia), may be taxed at 20%.
Monthly tax declarations are mandatory for small businesses, while micro businesses file annually. If you expect to handle cash, a cash register is required.
VAT registration becomes necessary if your taxable transactions exceed 100,000 GEL in any 12-month period, with VAT set at 18%. For those dealing with international clients or expenses, reverse VAT rules apply, but you can often reclaim this if VAT-registered. Keeping accurate records is essential, as audits can occur, and non-compliance may lead to fines or loss of status.
Residency, Double Taxation, and Global Mobility
Spending more than 183 days in Georgia makes you a tax resident, which can affect your global tax obligations. Double taxation treaties may not protect you if you split your time between countries or fail to establish clear residency.
Income earned while physically in Georgia is considered Georgian-sourced, even if your clients are abroad. If you travel frequently or plan to spend less than 183 days in Georgia, consult a tax adviser to avoid unexpected liabilities in other countries.
The high net worth program offers alternative residency options for those who qualify, often without the need for extended physical presence. US citizens and others with complex tax situations should seek specialized advice to ensure compliance both in Georgia and at home.
Embracing Georgia’s Tax Opportunities for Wealth and Freedom
Georgia’s 1% tax regime offers freelancers and small business owners a rare chance to keep more of what they earn while enjoying a vibrant, welcoming environment.
By understanding the rules, registering promptly, and staying compliant, you can unlock new levels of financial freedom and global mobility. As the world of work evolves, adapting to these innovative tax solutions is key to building lasting wealth and personal independence.
