A foreigner is allowed to establish and run a business in Georgia the same way as locals are. If a foreign resident legally enters Georgia and wishes to open a firm or establish a subsidiary of an existing foreign enterprise – it is quite an easy thing to do. A natural person just needs to choose what kind of an organization or sole proprietorship s/he prefers to launch.
Types of organizations or individual enterprises
Alongside the option of founding a limited liability company (LLC or Ltd), there are three types of special tax treatment choices applied to different entities including the most widely used:
- Natural persons (individuals) with the Status of a Micro Business;
- Entrepreneur natural persons with the Status of a Small Business;
- Persons with the Status of a Fixed-tax Payer.
The status of a micro business is granted to those natural persons who conduct economic activity independently and are not going to use any hired employees if their gross receivable income does not exceed GEL 30 000 (USD 11,000) a year. The status of a micro business is granted, revoked and the certificate of a micro business is issued according to the rules as prescribed by the Minister of Finance of Georgia.
The status of a Small Business is granted to entrepreneur natural persons (a respective certificate is issued). The gross income limit is determined as GEL 500,000 a year to be received during a calendar year for a natural person having the status of a small business. Taxable income of a person having the status of a small business shall be taxed at 1%, except as in cases if an entity’s gross income received from the economic activities has exceeded GEL 500,000 – then the Small Business shall be taxed at 3%.
A person having the status of a small business shall maintain a special book of records. The procedure for maintaining the book (including in an electronic form) is defined by the order of the Minister of Finance of Georgia. The loss incurred by a small business during a tax year shall not be carried forward to the next year, unless the taxpayer is removed from special tax treatment.
A fixed-tax payer may be a person who is not a VAT payer and who conducts one or more activities pre-defined by the Government of Georgia as subject to a fixed tax. A flat tax rate according to the types of activity determined by the Government of Georgia may be either from GEL 1 to GEL 2 000 for an object of taxation or 3% of the revenues from taxable activity.
Foreign individuals need to have their Georgian firms regularly report to the Tax and other types of authorities not to mention the requirement to pay the national treasury the respective taxes due. Consider emailing (firstname.lastname@example.org) or calling (+995322103410) Kudos Georgia to get the following services:
- Tax reporting;
- Team building.