What happens if you exceed 500,000 GEL on Small Business Status
When cumulative turnover passes 500,000 GEL, the rate becomes 3% from the first day of the month in which you crossed — applied to all taxable income in that month and every month after it, until the end of the calendar year. Months before the breach month stay at 1%. It is not 3% on the excess only.
The mechanic is month-based, not amount-based
The trigger is cumulative gross income for the calendar year passing 500,000 GEL. What changes is the rate for whole months, not for the portion of money above the line.
From the first day of the month in which the breach was recorded, and through 31 December, taxable income is taxed at 3%. That includes the part of the breach month that sat below the cap line.
Months completed before the breach month are unaffected and stay at 1%.
Georgian Tax Code Art. 90; Revenue Service SBS booklet
Two formulas that are wrong
The first wrong version: tax everything up to 500,000 at 1% and only the excess at 3%. This understates the liability, because the whole breach month moves to 3%, including the part below the line.
The second wrong version: apply the standard 20% rate to the overage. Exceeding the cap in a single year does not move you to the standard regime — it changes the Small Business Status rate for the rest of the year.
Both appear in circulation. If a calculation you have been given uses either, it is not the mechanic the Revenue Service applies.
Georgian Tax Code Art. 90
A worked example
Suppose you turn over 60,000 GEL a month. By the end of August your cumulative total is 480,000. During September you cross 500,000, finishing the month at 540,000.
January through August — 480,000 GEL — is taxed at 1%: 4,800 GEL.
September is the breach month, so all 60,000 of September is taxed at 3%, not just the 40,000 above the line: 1,800 GEL.
October, November and December are taxed at 3% as well, for as long as you keep trading that year.
The wrong formula would have charged 3% on 40,000 and 1% on the rest of September — 1,400 GEL instead of 1,800. The gap grows with every month left in the year.
Whether you keep the status
Exceeding the cap in a single year changes your rate but does not by itself cancel Small Business Status.
Exceeding it in two consecutive years does: the status is cancelled from the start of the following year.
There are other grounds for losing it, unrelated to turnover — your own request, three cash-register fines within one year, or carrying on a prohibited activity.
Wine tourism and agrotourism operate under a higher cap of 700,000 GEL.
Georgian Tax Code Art. 89–90; Order №999 (amended)
FAQ
- Does the 3% apply to the whole year retroactively?
- No. Months completed before the breach month stay at 1%. The 3% starts on the first day of the month in which you crossed the cap.
- Does the rate reset on 1 January?
- The cap is measured per calendar year, so a new year starts a new cumulative count and the rate returns to 1% — provided you still hold the status.
- Does income outside the regime count toward the 500,000?
- No. Salary and the income types in Resolution №415 Annex №5 — rent, dividends, interest, royalties and the rest — are excluded from the threshold as well as from the 1% base.
Sources
- Georgian Tax Code Art. 90; Revenue Service SBS booklet
- Georgian Tax Code Art. 90
- Georgian Tax Code Art. 89–90; Order №999 (amended)
This guide summarises published Georgian regulations and cites its sources. It is not legal or tax advice, and it cannot account for your particular circumstances. You remain responsible for what you file.