Micro Business Status (0% Tax): Eligibility, Restrictions, and When it's Better than Small Business Status
- Tinatin Tolordava
- Nov 18
- 10 min read
Table of contents
Why Micro Business Status Matters More Than People Think
What Micro Business Status Actually Is
Eligibility Rules for Micro Business Status
How to Apply for Micro Business Status in Georgia
Tax Obligations Under Micro Business Status
Micro vs Small Business Status: Which One Fits Better?
Comparison: Micro Business Status vs Small Business Status
When Micro Business Status Is Actually Better
When Small Business Status Is the Better Choice
Common Misunderstandings About Micro Business Status
How Gegidze Helps You Choose the Right Status
Frequently asked questions (FAQs)
Why Micro Business Status Matters More Than People Think
Georgia is known for its 1 percent Small Business Status. It is the regime everyone talks about when searching for “how to register a business in Georgia,” “Georgia business tax,” or “Georgia small business taxes.” But hidden behind the popularity of the 1 percent model is another regime that is even lighter. Micro Business Status. A 0 percent tax rate if you meet very specific rules.
Most foreigners never hear about it. Others assume it is the same as Small Business Status. It is not. The eligibility rules are strict. The allowed activities are narrow. The turnover limit is low. And the whole system is built for a very different type of entrepreneur.
What Micro Business Status Actually Is
Micro Business Status is an official tax regime under the Tax Code of Georgia designed for very small, low-volume, local service providers. It allows qualifying individuals to pay zero percent tax on their turnover.
This is not an exaggeration. If you qualify, your taxable income becomes zero. You can earn up to the allowed limit and pay nothing.
But the catch is simple. The activity must be local and physical. Not digital. Not remote. Not foreign-client based. Not consultancy. Not IT. Not translation. Not design. Not marketing. Nothing that resembles online work or service exports.
Micro Business Status was created as a social and economic support tool for small craftsmen, tutors, local repair workers, and individuals earning modest income through hands-on activities inside Georgia.
If you are a foreign freelancer working for clients abroad, this status is not for you. If you want a simple structure for remote work, you need Small Business Status. The 1 percent system is designed for that type of entrepreneur.
Micro Business Status is a different world.
Eligibility Rules for Micro Business Status
The eligibility rules are extremely strict. In fact, most foreigners will not qualify. But for those who do, the 0 percent tax can be useful.
Annual Turnover Limit: 30,000 GEL
Your total taxable revenue must not exceed 30,000 GEL per calendar year. If your income crosses that limit, your Micro Business Status is automatically revoked. You immediately lose the 0 percent rate, and you may be reclassified under standard IE rules.
This limit is why the status is intended only for micro scale activities. Repair work. Tutoring. Handmade crafts. Small services performed physically within Georgia.
If you expect to earn more than 30,000 GEL in a year, Micro Business Status is not sustainable. You should choose Small Business Status with a generous 500,000 GEL limit.
Allowed Types of Activities
Only certain activities are approved. These activities must be local, performed by hand, and delivered physically.
Common approved activities include:
Tailoring
Handicrafts
Household repair work
Shoe repair
Small woodworking
Sewing
Home-based beauty services
In-person tutoring
Local vending at markets
Handmade product sales
These are low-volume, low-margin, locally performed services. No foreign clients. No remote work. No digital skills.
Activities You Cannot Perform
This is the most important part. Most people are rejected because they misunderstand what Micro Business Status is for.
You cannot perform any of the following:
IT services
Consulting
Programming
Digital marketing
Translation
SEO work
Social media management
Graphic design
Branding
Remote project work
Copywriting
Online tutoring
Selling digital products
Cross-border services
Online store operations
Amazon FBA or dropshipping
Airbnb rentals
Real estate services
Any activity earning money from abroad
If your income enters Georgia from a foreign client, it is automatically ineligible.
Micro Business Status is not for freelancers. It is not for remote workers. It is not for digital nomads. It is not for anyone searching for “english to georgian translation,” “bank of georgia account,” “small business tax Georgia,” or “how to register business in Georgia” for remote work purposes.
Requirement to Work Alone
Micro Business Status is only for solo workers. You cannot hire employees. You cannot subcontract. You cannot pay assistants from your business activity.
This restriction makes it unsuitable for anyone who wants to scale or operate even a small team.
Foreigners Can Qualify, but Rarely
Foreign nationals can legally qualify, but the reality is simple. Most foreign entrepreneurs work with foreign clients or offer digital services. These activities do not meet Micro Business Status requirements.
A foreigner might qualify if they:
Teach piano locally
Offer in-person tutoring
Create handmade products
Perform local repair work
Offer face-to-face beauty services
But this is a small percentage of applicants.
How to Apply for Micro Business Status in Georgia
The application process is stricter than Small Business Status because the Revenue Service must verify your activity.
Step 1: Register as an Individual Entrepreneur
Before applying for Micro Business Status, you must register as an IE with the Revenue Service Georgia or Public Registry. This requires:
Passport or ID
Georgian address
Phone number
Application submission
Gegidze can complete this for you through Power of Attorney if you are abroad.
Step 2: Submit a Request for Micro Business Status
You must request the status manually with your local tax inspector. This request cannot be done automatically.
You submit:
Your IE certificate
Details of your activity
Statement confirming you will work alone
Proof that your service is local and physical
Step 3: On-Site Inspection
A tax inspector may visit your workplace or ask you to demonstrate the activity. For example:
Showing your workshop
Showing your crafting tools
Explaining your services
Demonstrating production of handmade goods
This step is mandatory for many applications.
Step 4: Approval
If approved, you receive written confirmation from the Revenue Service Georgia. Your Micro Business Status begins the same month.
Tax Obligations Under Micro Business Status
Zero Percent Tax Rate
If your activity and turnover meet the rules, you pay no tax at all. This alone makes the structure appealing, but only if you fit the narrow criteria.
Do You Need Monthly Declarations?
Under Micro Business Status you typically do not submit monthly turnover declarations because your activity falls under a simplified reporting obligation. However, you must still comply with Revenue Service requirements such as:
Responding to notices
Maintaining tax records
Updating your business activity if it changes
Do Banks Still Monitor Your Activity?
Yes. Bank of Georgia, TBC Bank, and Liberty Bank all perform AML checks. If you receive foreign transfers, the bank may question why you have Micro Business Status while earning non-local income.
Many foreigners are rejected from banking compliance because they registered Micro Business Status incorrectly. This is why choosing the right IE status matters.
Residency Considerations
Income under Micro Business Status does not help with Georgian tax residency.Why?
Because tax residency requires:
Consistent declarations
Bank activity
Demonstrable economic presence
Micro Business Status generates very little paperwork. It is not designed for people pursuing residency or international tax planning.
If you want residency benefits such as tax exemptions on foreign dividends, then Small Business Status is the correct choice.
Micro vs Small Business Status: Which One Fits Better?
Here is where things become clear. Micro Business Status is only better in one situation. When you meet every requirement and want absolutely zero tax.
Small Business Status with the 1 percent rate is better for:
Remote workers
Freelancers
Consultants
IT workers
Translators
Designers
Marketers
Agency owners
Anyone earning abroad
The next section explains the comparison in detail.
Comparison: Micro Business Status vs Small Business Status
Choosing the right tax regime is one of the most important decisions you make when registering an Individual Entrepreneur (IE) in Georgia. Micro Business Status and Small Business Status both look simple on paper, but they serve completely different people and income types.
Below is the full breakdown of how they compare so you can choose the structure that fits your activity.
Turnover Limits
Micro Business Status
Maximum turnover: 30,000 GEL per year
Exceeding this amount disqualifies you immediately
Small Business Status
Maximum turnover: 500,000 GEL per year
You can grow your business without losing the 1 percent rate
Large enough for agencies, consultants, freelancers, and IT workers
The difference is huge. Micro Business Status is meant for very small local businesses. Small Business Status supports real income potential.
Allowed Activities
Micro Business Status
Only local, physical, hands-on services
No income from abroad
No digital work
No business with foreign clients
No remote services
Small Business Status
IT services
Consulting
Design
Translation
Programming
Marketing
SEO
Web development
Remote support
SaaS work
Agency operations
Foreign client billing
This is why foreigners almost always choose Small Business Status. Micro Business Status is designed for the local economy, not online work.
Tax Rate
Micro Business Status
0 percent tax if all rules are met
Small Business Status
1 percent tax on turnover
Both are attractive, but only one supports online income.
Documentation and Compliance
Micro Business Status
Requires verification of activity
Requires in-person discussion with the tax inspector
May involve workshop inspection
Fewer monthly declarations, but more checks at the beginning
Not useful for residency or international documentation
Very limited scalability
Small Business Status
Requires monthly declarations, even zero declarations
Strong fit for Georgian tax residency
Clean structure for banking
Accepted by Bank of Georgia and TBC Bank for foreign transfers
Easy to maintain long term
Suitable for DTT protection and residency planning
Foreign Client Eligibility
Micro Business Status
Foreign clients are not allowed
Income from abroad violates the structure
Receiving money from another country triggers questions from the bank
Small Business Status
Designed for foreign client income
Perfect for freelancers and remote workers
Popular with IT and SaaS businesses
Supported by the territorial tax system
Scalability
Micro Business Status
Not scalable
Cannot hire staff
Cannot grow income meaningfully
Not suitable for long term digital work
Small Business Status
Highly flexible
Smooth transition to LLC if turnover reaches 500,000 GEL
Good foundation for residency, VAT registration, and corporate structures later
When Micro Business Status Is Actually Better
Even though Small Business Status fits most foreign entrepreneurs, there are still situations where Micro Business Status is the smarter choice.
Low Volume Local Services
If your income is small and local, Micro Business Status becomes ideal. Examples include:
Shoe repair
Tailoring
Handmade crafts
Home-based beauty services
Bike repair
Leather work
Local photography
Furniture restoration
These businesses often earn below 30,000 GEL and operate physically. The 0 percent rate gives them breathing room.
In-Person Teaching or Tutoring
Teaching languages, music, or school subjects in person qualifies. The activity is local, personal, and small in scale.
Handmade or Craft Vending
Micro Business Status is perfect for people selling handmade goods at weekend markets, fairs, or small craft events.
Examples include:
Handmade candles
Soap making
Pottery
Art prints
Woodwork
If all sales occur inside Georgia, you qualify.
Elderly Georgians or Low Income Individuals
The regime was originally designed to help low income locals and retirees who earn small amounts.
Seasonal or Hobby Income
If your activity is small and irregular, Micro Business Status is a low maintenance structure. It avoids monthly calculations and annual tax burdens entirely.
When Small Business Status Is the Better Choice
Now let’s flip to the other side. These are the situations where Small Business Status outperforms Micro Business Status in every way.
You Work With Foreign Clients
If you receive payments from clients abroad, Small Business Status is the correct structure. Foreign source service income is considered Georgian source income when you work physically in Georgia.
Common examples include:
Design
Copywriting
SEO
Programming
Consulting
Translation
Marketing services
Remote coaching
Online tutoring
Digital content creation
Web development
These activities make you ineligible for Micro Business Status. Small Business Status is the tax structure created for them.
You Want Georgian Tax Residency
Small Business Status supports residency because you submit monthly declarations and create clear financial activity in Georgia.
Micro Business Status produces very few filings, which weakens your residency profile.
You Want Banking Stability
Banks like Bank of Georgia and TBC Bank perform anti money laundering checks on foreign transfers. Micro Business Status and foreign transfers do not match. Small Business Status aligns perfectly because it is designed for global service income.
You Plan to Transition to an LLC Later
Small Business Status gives you a natural path toward an LLC, Virtual Zone company, or International Company setup.
Micro Business Status does not.
You Rely on DTT Protection
Double Taxation Treaties protect you only if your IE structure is legitimate and defensible internationally. Micro Business Status does not support remote work or cross border income. Small Business Status does.
Common Misunderstandings About Micro Business Status
Micro Business Status is heavily misunderstood, especially by foreigners who try to fit their online work into a regime that does not allow it.
Here are the most common myths.
Myth 1. Micro Business Status is easier than Small Business Status.
Not true. The inspection process can be more complicated than simply filing 1 percent declarations.
Myth 2. Micro Business Status is for freelancers.
Incorrect. Freelancing with foreign clients is prohibited.
Myth 3. Micro Business Status allows you to avoid all filings.
Not true. You must still comply with Revenue Service requirements.
Myth 4. Foreign payments are allowed under Micro Business Status.
Not allowed. Banks will question any foreign transfers.
Myth 5. Micro Business Status is a better financial choice for everyone.
It is only better for very small local activities.
How Gegidze Helps You Choose the Right Status
Choosing between Micro and Small Business Status is not always obvious. Your income type, your future plans, and your banking habits all matter.
Our goal is simple. Make sure you choose the structure that fits your income and keeps you compliant long term.
If you are unsure whether Micro Business Status or Small Business Status fits your situation, book a free consultation with Gegidze.
We review your income, your future plans, and your residency goals and guide you toward the safest, most efficient tax structure in Georgia.
Frequently asked questions (FAQs)
Can foreigners qualify for Micro Business Status in Georgia?Yes, but it is rare. Micro Business Status is designed for small local activities such as repair work, handicrafts, in-person tutoring, and home-based services. Most foreigners work with international clients or perform digital services, which fall under Small Business Status instead. Income from abroad does not qualify for Micro Business Status.
Is Micro Business Status better than Small Business Status for online work?No. Micro Business Status does not allow remote work, IT services, consulting, translation, marketing, or any activity with foreign clients. Small Business Status is the correct structure for freelancers, consultants, digital service providers, and anyone receiving foreign-source income while working in Georgia.
What happens if I exceed the 30,000 GEL limit under Micro Business Status?Your Micro Business Status is revoked immediately. You may be reclassified under standard IE taxation or required to switch to Small Business Status. If your income is likely to grow, choosing Small Business Status from the beginning avoids penalties, compliance issues, and Revenue Service reviews.
