How Foreigners Can Pay 1% Tax in Georgia: If you are a freelancer, entrepreneur, or digital nomad looking for a low-tax destination, Georgia offers one of the most attractive schemes in the world: the Individual Entrepreneur Small Business Status, which allows qualifying foreigners to pay just 1% tax on turnover up to a certain income limit. This guide will walk you through everything you need to know to benefit from this opportunity in 2025.
Why Georgia’s 1% Tax Regime Is So Attractive
Georgia has been gaining global attention for its low taxes, straightforward bureaucracy, and ease of doing business. The 1% tax scheme is particularly appealing because:
- It’s available to foreigners and locals alike.
- It applies to total turnover, not just profit.
- There is no VAT obligation under the threshold.
- Accounting requirements are minimal compared to many other countries.
Who Can Qualify for the 1% Tax in Georgia
To be eligible for the Small Business Status and pay just 1% tax:
- Register as an Individual Entrepreneur in Georgia.
- Annual turnover must not exceed 500,000 GEL (around $185,000 USD).
- Income should come from allowed activities (some professions, like lawyers and architects, are excluded).
- No more than the allowed number of employees under this status.
- Not working as a contractor for a single foreign company that could be considered your employer.
Step-by-Step: How to Get the 1% Tax Rate
Here’s the process for registering and activating your low-tax status:
1. Register as an Individual Entrepreneur
- Visit the Public Service Hall in Georgia.
- Present your passport (and residency permit if applicable).
- Pay the registration fee (around 20 GEL for standard processing).
- Receive your taxpayer identification number.
2. Apply for Small Business Status
- After registration, visit the Revenue Service office or apply online.
- Submit your application for Small Business Status.
- Receive confirmation of your eligibility for the 1% turnover tax rate.
3. Open a Georgian Bank Account
- Choose a bank that supports foreign entrepreneurs (TBC Bank, Bank of Georgia, etc.).
- Use the account for all business-related transactions to maintain clean records.
4. Maintain Monthly Reporting
- File a simple monthly turnover declaration with the Revenue Service.
- Pay 1% of your gross turnover for that month.
- Example: If you earn 10,000 GEL in a month, your tax will be just 100 GEL.
Example of How Much You Save
| Monthly Income | Tax in Georgia (1%) | Tax at 20% Rate |
|---|---|---|
| 5,000 GEL | 50 GEL (~$18) | 1,000 GEL (~$370) |
| 10,000 GEL | 100 GEL (~$37) | 2,000 GEL (~$740) |
| 20,000 GEL | 200 GEL (~$74) | 4,000 GEL (~$1,480) |
Other Benefits of Doing Business in Georgia
- No tax on foreign-sourced income for individuals not qualifying as tax residents.
- No restrictions on currency – you can hold accounts in GEL, USD, EUR.
- Fast and inexpensive company setup.
- Double taxation treaties with several countries.
Important Things to Keep in Mind
- Annual turnover over 500,000 GEL moves you to standard taxation.
- Some professions are excluded – check the official list before applying.
- Keep invoices and payment records for potential audits.
Conclusion
For freelancers, consultants, and small business owners, Georgia’s 1% tax regime is one of the easiest and most affordable ways to run a business legally while keeping taxes extremely low. With simple registration, minimal bureaucracy, and a welcoming environment for foreigners, it’s no surprise that Georgia is becoming a hotspot for location-independent entrepreneurs.
📹 Watch our complete guide on registering a business in Georgia here:
