Taxes in Georgia for Individual Entrepreneurs
Georgia has become an attractive destination for doing business due to its liberal tax policy and favorable investment climate. Registering an individual entrepreneurship (IE) in this Georgia can be a profitable solution for those seeking opportunities to develop their business. In this article, we will examine the main taxes for IEs in Georgia and the advantages of doing business in this country.
Small Business Tax Regime
One of the key advantages of running a small business in Georgia is the special tax regime that provides simplified taxation. For IEs with small business status, a flat tax of 1% of annual income applies, which replaces the profit tax and dividend tax. This preferential regime is available for companies with an annual income of up to 500,000 GEL (approximately $170,000).
Value Added Tax (VAT)
The standard VAT rate in Georgia is 18%. However, for IEs providing services to foreign companies electronically, an exemption from VAT applies. This creates additional advantages for entrepreneurs working in IT, consulting, and other services that can be provided remotely.
Personal Income Tax
The personal income tax for IEs in Georgia is 20% of net profit. However, as mentioned above, for small businesses, a simplified tax of 1% of income applies, significantly reducing the tax burden.
Property Tax
In Georgia, a property tax of 1% of the property value is levied. This tax applies to individuals and legal entities owning real estate in the country.
Payroll Tax
If an IE hires employees, it is necessary to pay personal income tax on salaries at a rate of 20%. This tax is withheld from the employee’s salary and remitted to the budget by the employer.
Advantages of Doing Business in Georgia
In addition to preferential taxation, Georgia offers entrepreneurs other advantages:
- Stable political situation and implementation of economic reforms aimed at creating a favorable investment climate.
- Advantageous geographic location at the crossroads of trade routes between Europe and Asia.
- Free economic zones with additional tax incentives and preferences.
- Double tax avoidance agreements with more than 50 countries.
- Simple business registration procedure and minimal requirements for charter capital.
Overall, opening an IE in Georgia can be an attractive option for entrepreneurs seeking to develop their business in a favorable tax and investment environment.