“A tax regime for small businesses, which is unique throughout the world, is already in force”, says Prime Minister of Georgia Mamuka Bakhtadze.
Per the new tax initiative that came into play on July 1, the turnover tax for small entrepreneurs will be reduced five times. This far-reaching reform applies to almost 100 percent of individual entrepreneurs.
In addition, while in the past small businesses were defined as businesses with a turnover of up to 100,000 GEL, from now on those with 500,000 GEL will also qualify as small businesses.
Instead of five percent, small businesses’ revenues, from now on will be taxed at one percent, and smaller businesses will be able to keep the simplest tax accounting in the future.
Taxes will be paid, and declarations will be submitted, on a monthly basis, not through advance tax payments, which was a major problem for entrepreneurs in Georgia in the past, as they were forced to pay taxes in advance.
Furthermore, small entrepreneurs will be able to register as VAT payers, besides enjoying concessional tax treatment.
Our key message is overcoming poverty in Georgia, and the only way to this goal is to encourage micro, small, and medium-size businesses. That is the only way to deal with our economic challenges”, said Baktadze.
“As promised, we are introducing fair play in Georgia’s economy, an economic model focused on overcoming and eliminating the major challenge of defeating poverty in Georgia once and for all. Our political team inherited an economic model that, unfortunately, placed a heavier tax burden on small businesses than on large businesses, with smaller entrepreneurs facing a formidable obstacle in expanding markets to land their services or products. In addition, tax administration mechanisms often forced small business into shadow economy”, Bakhtadze said.
“On one hand, this new tax initiative establishes a minimal tax burden for small businesses. On the other, it allows for the utilization of simplified tax accounting for entrepreneurs to minimise tax administration-related costs”, he added.
