Narrow door of Georgian micro and small business paradise
24 February, 2011
Narrow door of Georgian micro and small business paradise

Georgian government started delivery of certificates for micro and small business status to make available the taxation preferences introduced by the new tax code. But apparently 80% of eligible candidates remain out of the coverage area of privileged.
The new tax code that entered into effect starting January of this year introduces simpler taxation regulations for micro and small business.
Any physical entity [or individual entrepreneur] who does not use employees’ labor and whose annual turnover does not exceed GEL

30 thousand is exempted from taxes. Business is small if annual turnover of individual entrepreneur stands under GEL 100 thousand. Small business is exempted from the Value Added Tax (VAT) and can choose taxation terms: if it presents financial paper proving that either 5% of the business annual turnover or 60% of its total incomes go on financial expenses their income will be taxed by 3%. Otherwise it will be taxed by 5%.
According to Giorgi Tskhakaia, Head of Revenue Service, the financial documentation in question  does not require hiring of an accountant or any extra expenses. Entrepreneurs can handle with it pretty well and be taxed by just 3%.
To enjoy the preferences eligible candidates are required to submit due applications at the revenue service for granting certificates either on micro or small business status. About 3444 applications are already registered at the revenue service and 2500 out of them requires micro business status. 
Revenue Service of the Ministry of Finances of Georgia has already undertaken delivery of certification starting February 18, 2011.
What makes business people as well as economic analysts worry is that the list of eligible beneficiaries of the much trumpeted taxation preferences is cut down next to nothing. The fact that only physical entities can enjoy the proposed privileges leaves legal entities like small beauty salons and bakeries [with annual turnover under GEL 30 thousand] that make bigger part of small and medium sector in uncompetitive condition. They will be taxed similarly to big enterprises with annual turnover exceeding several millions. This is discriminating and discourages business, economic analysts say. Government does not elaborate the problem. 
According to Levan Kalandadze, Executive Director of Georgian Small and Medium Business Association, the reason is that the bigger part of Georgian enterprises is made by small Ltd companies actually and if government makes taxation privileges available to them tax administration of about 80% of business will become simpler. It means that taxation crackdown on business laying ground to fulfillment of the revenue-based budgetary incomes will be difficult.
“It is not handy to government at the moment,” he said.
But this is a part of the problem. Another confusing thing is that individual entrepreneurs who were supposed to benefit out of taxation privileges can scarcely enjoy them. The list of eligibility criteria for micro business status states that the status of micro business cannot be granted to individual entrepreneurs if they perform a service in a sector that requires licenses and permits, implement currency exchange operations, are involved in medical, architectural, advocacy and notary, audit, consultancy [including tax consultancy] service or  gambling business. Moreover the micro business status door is closed to trade people, people involved in communal activity like repair of the consumer equipment/technical appliances, hairdressing and other related activities.  
“I really cannot understand who [if anybody ever] is the target group for the proposed micro business status. The list of eligible candidates is reduced to minimum.  Individual entrepreneurs were made by petty traders in fact, hairdressers, and people involved in communal activity sector but they are refused,” Nodar Khaduri, economic analyst, says. 
He fears that the tighter inflation pressure this year may aggravate the puzzle  who can sneak through the narrow passage of Georgian micro and small business paradise.
“Nobody provides with an explanation whether or not the 12% inflation pressure will be taken into account during estimation of annual turnover of business to grant either micro or small business status to it. The problem is that if  annual turnover equaled GEL 30 thousand and GEL 100 thousand past year now this figure is  increased to GEL 33 thousand and GEL 112 thousand respectively due to inflation, and what such businesses are supposed to do? Can they apply for micro/small business status or not? This is a really huge question,” Khaduri told Georgian Journal.

Other Stories
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
Georgia second among the fastest growing tourist destinations in Europe
Georgia is among the fastest growing tourist destinations in Europe. The data is published by the UN World Tourism Organization.
Bitmain launches world digital mining summit in Tbilisi, Georgia
Bitmain CEO Jihan Wu and Roger Ver, CEO of Head Speaker List featuring Circle, and Genesis Mining when Digital Mining Leaders Convene In Tbilisi on September 21-23

Exchange Rates
GEL Exchange Rate
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
January 2019
Mon Tue Wed Thu Fri Sat Sun
1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31