Small Business in Georgia 2025: Updated Tax Declaration and More

In today’s article, we will examine the key points of these changes:

           1.        The new structure of the declaration and the rules for its completion
           2.        Examples of calculations from Order No. 390
           3.        For which types of activity the income limits have been increased
           4.        Which activities will no longer be eligible for the small business regime
           5.        Deadlines for the changes to come into effect

Previously, the small business monthly declaration had only one field for reporting all income for the month. Now, according to the updated form (Appendix No.5 to Order No.999, with amendments made by Order No. 390), income must be broken down by types:

Line 18 – Income received in cash (via cash register or receipts).

Line 19 – Income received via POS-terminal.

Line 20 – Income received through bank transfers or other non-cash methods (including online transactions, etc.).

Line 21 – Income received in other forms (for example, transfers through electronic payment systems, "Golden Crown," cryptocurrency payments, etc.).

Cash Method:

 If you use the cash method for accounting income, it is mandatory to distribute income across lines 18–21.

Columns 22–24 are not filled out under the cash method.

Accrual Method:

For IEs using the accrual method, the declaration additionally reflects:

Amounts accrued but not yet received (Line 22),

Income already accounted for and taxed, but only actually received in the reporting period (Line 23),

Advances received in the reporting period (Line 24).

The taxable income (Line 17) under the accrual method is calculated using the formula:

Sum of Lines 18–21

+ (Line 22)

- (Line 23)

- (Line 24)

Small business IEs are required to fill in the following columns in the updated declaration form:

               Column 15 – Cumulative total income from the beginning of the calendar (tax) year. This includes all types of income accounted for under the small business regime, excluding income taxed under the general rules (dividends, interest, etc.).

               Columns 18–21 – Detailed breakdown of income received in the reporting month by method/source:

               Column 18 – Income received via cash register (cash payments confirmed by a receipt).

               Column 19 – Payments received via a physical POS-terminal.

               Column 20 – Income received to the account (including bank transfers).

               Column 21 – All other forms of income not subject to withholding at source (e.g., transfers to payment systems like Payoneer, PayPal, Wise, income from cryptocurrency transactions, bartering agreements, etc.).

Once the necessary income data for Columns 15 and 18–21 for the previous reporting period (month) is entered, Column 16 (tax rate) and Column 17 (income for the previous month) will be automatically calculated based on the input data.

Example 1 (Cash Method)

Situation: Giorgi (small business status) operates in retail trade and agriculture. Over 10 months, his income was 300,000 GEL (retail) + 150,000 GEL (agriculture). In October, he had 80,000 GEL (30,000 + 50,000). Additionally, he earns interest and rental income, which are not considered within the income limit.

Declaration:
Column 15: 450,000 GEL (cumulative total)
Column 16: 1%, since the limit of 500,000 GEL has not been exceeded.
Column 17: 80,000 GEL (monthly income).
Columns 18 and 20: 30,000 GEL in cash and 50,000 GEL in non-cash payments.
Column 25: 53,000 GEL of exempt income (3,000 GEL in benefits for war veterans and 50,000 GEL from agriculture).
Column 26: 270 GEL in tax (1% of (80,000 – 53,000)).


Example 2 (Accrual Method)
Situation: Giorgi (small business status, VAT payer) received an advance payment of 10,000 GEL in May and shipped goods worth 15,000 GEL in June (2,000 GEL paid in June, 3,000 GEL in July).
May:
-10,000 GEL is shown in Line 20, but subtracted in Line 24 (advance). Taxable income = 0.
June:
-15,000 GEL is considered income for the month (Line 17).
-2,000 GEL is recorded as a receipt (Line 20), while 13,000 GEL is recorded as accrued income (Line 22).
The tax rate is 1%, and the tax is 150 GEL.
July:
-3,000 GEL in receipts is shown in Lines 20 and 23, taxable income = 0.

One of the significant amendments to Order No. 390 is the change for those engaged in agro- and wine tourism:

           1.        A limit of 700,000 GEL for annual income will be introduced for these types of businesses starting from January 1, 2025 (previously, it was 500,000 GEL for all sectors).
           2.        If the 700,000 GEL limit is not exceeded, the tax rate remains at 1%. If the limit is exceeded in any month of the calendar year, the tax rate increases to 3% starting from that month.

According to changes in the Government Resolution No. 415, income derived from providing services related to the construction of residential and non-residential buildings (code 41.2 of the National Classification of Georgia SEC 006-2016), civil engineering services (code 42), and/or specialized construction services (code 43), if the recipient is a Georgian company, organization, or individual entrepreneur, will no longer be eligible for the small business tax regime. These income sources will be taxed at the general rate of 20% on the difference between income and expenses, and will need to be reported in the annual declaration by April 1 of the year following the reporting period.

1.        From the reporting period for December 2024, the updated rules for filling out the declaration (new lines, clarified column 15, etc.) will come into effect.
2.        From January 1, 2025, the 700,000 GEL limit for agro- and wine tourism will apply (Subsection "b" of Article 1, Order No. 390).
3.        From February 1, 2025, income from IEs providing services under codes 41.2, 42, and 43 will be excluded from the small business regime.

1.        The government is tightening control over small business activities, as evidenced by the more detailed declaration form and the need to precisely break down income by type (cash, POS-terminal, non-cash, etc.).
 2.        At the same time, the income limit (up to 700,000 GEL) has been increased for agro- and wine tourism, where the government sees potential for growth and aims to stimulate the development of this sector.
 3.        The government is removing income from construction-related activities (under codes 41.2, 42, 43) from the small business tax regime. These changes are aimed at addressing the issue of tax evasion, where individuals register as small businesses but effectively work as employees under the control of an employer. This situation complicates administration and increases tax disputes due to misclassification of labor relations. The new rules aim to ensure a level playing field for taxation.