A business in Georgia is most often registered as a limited liability company (LLC), and it pays profit tax under the "Estonian" model: tax is paid when profit is distributed, and profit kept in the business is not taxed. The popular 1% rate belongs to a different regime: small business status for an individual entrepreneur. Georgia is sometimes offered as a budget offshore option, but the benefit arises for those who actually live and work in the country.
Profit tax
The Tax Code of Georgia (Article 97) defines the taxable object of a resident enterprise as:
- distributed profit;
- expenses and other payments not related to economic activity;
- free-of-charge supplies of goods and services and free-of-charge transfers of funds;
- representation expenses above the set limit.
The profit tax rate is 15% (Article 98). A rate of 20% applies to banks, credit unions, microfinance organizations and lenders.
Dividends paid by a resident enterprise to an individual, a non-commercial legal entity or a foreign company are additionally subject to withholding tax at a rate of 5% (Article 130).
Small business status: 1% for individual entrepreneurs only
Under Article 88 of the Tax Code, small business status can be obtained only by an individual entrepreneur who is a natural person. The conditions of the regime:
- a rate of 1% on income up to GEL 500,000 per calendar year;
- above GEL 500,000, 3% from the month the threshold is exceeded until the end of the year;
- the status is revoked if gross income exceeded GEL 500,000 for two consecutive calendar years;
- the status is also revoked for certain violations, for example three or more penalties for cash discipline within a year.
The government may prohibit the use of the regime for certain types of activity. So comparing "1% in Georgia" with company taxes in another country is only valid after checking whether your activity and legal form qualify for this regime.
VAT
A person must register as a VAT payer if taxable transactions over any 12 consecutive months exceeded GEL 100,000; the application is filed no later than 2 business days after the threshold is exceeded (Article 165). For a service business with foreign clients, it is important to determine the place of supply of services in advance.
Who Georgia suits
A Georgian company or individual entrepreneur status makes sense when the owner or team lives in Georgia, decisions are made there, and there is a clear banking history. If the business is run entirely from another country and Georgia has only an address, the tax authorities of the owner's country may treat the company as managed from there. We cover the difference between offshore and onshore structures in our article offshore vs onshore.
Banking and KYC
Bank onboarding depends on the owner's country of residence, the type of services, contracts and the source of funds. A non-resident should check the list of documents and whether a personal visit is required in advance. For services, contracts, a website and proof of work will be useful; for trading, documents from suppliers and on the route of the goods.
Two-year budget
The cost estimate includes incorporation, a registered address, accounting and tax bookkeeping, VAT registration if the threshold is exceeded, banking support and changes in the register.
Example
An IT team lives in Tbilisi and works with foreign clients. Each developer should check whether small business status is available for their type of activity, and a company will be needed if shared contracts, hiring and reinvestment of profit are required. For an IT business, our articles international company for an IT agency and company for consultants and freelancers are also useful. If your clients are in the EU, compare Georgia with an Estonian OÜ.
European options for the same task are compared in Estonia or Cyprus, and details on the Cypriot Ltd after the 2026 reform are in the guide to a company in Cyprus.
Offshora will compare a Georgian structure with the alternatives in terms of the owner's taxes and suitability for banking. Send us your country of residence, type of business, clients' geography and expected payments. We handle registration and ongoing support under our company registration and maintenance program.
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