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Small Business to Pay 1% Turnover Tax on Taxable Income

Starting July 1, 2018 small business companies will pay 1% of total incomes (turnover tax), instead of today’s 5% tax. The smoothed tax regulations will refer to about 120 000 physical entrepreneurs and they will enjoy the status of a small entrepreneur.

Small business will maintain the opportunity for keeping tax records. Namely, small companies will be able to keep a special record log for goods and services. As a result, small business companies will not be obliged to do any other bookkeeping records. Moreover, small business will be obliged in law-determined cases to use only control-cash registers and consignment notes. Taxes must be declared and paid on monthly basis and the so-called advance payment practice will be abolished fore small entrepreneurs.

Along with preferential tax regime, small entrepreneurs will be able to get registered as VAT payers and count VAT or get back VAT from the state budget in automatic regime.

“The new tax initiative introduces minimum tax burden (1%), on the one hand, and minimizes tax administering expenses through alleviation of tax records, on the other hand. As a result of this reform, small business will increase its ratio in GDP”, the statement by Ministry of Finance reads.

As reported, Government of Georgia introduced the mentioned tax initiatives on February 15, 2018.