The Ministry of Finance of Georgia has rejected a proposal from business associations to increase the mandatory Value Added Tax (VAT) registration threshold from 100,000 GEL to 300,000 GEL. As a result, the existing 100,000 GEL annual turnover limit remains in force for all commercial entities operating in the country.
Business groups had lobbied for the increase, arguing that raising the threshold would reduce administrative burdens for small enterprises, lower accounting overhead, and align tax obligations more closely with recent turnover growth across small and medium-sized enterprises.
Government Rationale and Tax System Controls
Explaining the decision, financial officials stated that raising the mandatory threshold could distort competition between businesses operating in similar sectors. According to the ministry, creating a higher ceiling might allow larger small-scale enterprises to avoid VAT while competing directly against registered VAT payers, leading to unequal market conditions.
In addition, tax authorities emphasized the need to maintain robust monitoring across the business ecosystem. Keeping established oversight boundaries helps prevent artificial splitting of business entities designed to avoid reaching statutory reporting thresholds.
Impact on Expats and Small Businesses in Georgia
Under Georgian tax legislation, any business entity or individual entrepreneur whose gross turnover exceeds 100,000 GEL during any continuous 12-month period must register as a VAT payer with the Revenue Service within two working days. Once registered, standard VAT applies at a rate of 18% on taxable supplies.
For foreign entrepreneurs, small-business owners, and individual contractors in Georgia, the decision means accounting calculations and VAT monitoring must continue under the longstanding threshold rules. Tax advisors recommend that growing firms closely track monthly turnover to ensure timely compliance with Revenue Service requirements.
