Tax regime for small businesses, which is unique throughout the world, is already in force, Georgian Prime Minister commented on the enactment of the new, unique tax regime cutting small businesses’ turnover taxes five times.
This far-reaching reform applying to almost all individual entrepreneurs was discussed by the Head of Government during today’s briefing.
“As promised, we are introducing fair play in Georgia’s economy, an economic model focused on overcoming and eliminating the major challenge of defeating poverty in Georgia once and for all.
Our political team inherited an economic model that, unfortunately, placed a heavier tax burden on small businesses than on large businesses, with smaller entrepreneurs facing a formidable obstacle in expanding markets to land their services or products.
In addition, tax administration mechanisms often forced small business into shadow economy. Our key message is overcoming poverty in Georgia, and the only way to this end is to encourage micro, small, and medium-size businesses. That is the only way to deal with our economic challenges. Today, a unique tax regime was enacted in Georgia to cut small businesses’ turnover taxes five times.
It is a very large-scale reform applying almost to 100% of individual entrepreneurs, which means about 120,000 entrepreneurs and those many behind them. Our parliamentary team supported this initiative. Consequently, the relevant amendments to the Tax Code were approved by the Parliament to come into force today,” Mamuka Bakhtadze stated.
The Prime Minister described in detail the absolutely unique tax regime offered by the Government to small businesses.
“The status of small businesses is granted to entrepreneurs whose cumulative annual revenues are lower than 500,000 GEL, instead of the currently applicable 100,000 GEL threshold. Instead of 5%, small businesses’ revenues, from now on, will be taxed 1%, and smaller businesses will be able to keep the simplest tax accounting in the future. Taxes will be paid, and declarations will be submitted, on a monthly basis, not through advance tax payments, a major problem for our entrepreneurs in the past, who would be forced to pay taxes in advance. Small entrepreneurs will be able to register as VAT payers, besides enjoying concessional tax treatment,” the Head of Government emphasized.
The Prime Minister also explained that registering as a VAT payer does not cause the loss of the status of a small entrepreneur. According to Mamuka Bakhtadze, everyone will be able to use the status of a small entrepreneur, regardless of whether or not they are VAT payers.
“On one hand, this new tax initiative establishes a minimal tax burden for small businesses. On the other, it allows for utilizing simplified tax accounting for entrepreneurs to minimize tax administration-related costs.
This regime is available for us by our citizens, those self-employed, for whom this type of tax cut is vitally important for continuing their economic activities and receiving relevant services from the state and different financial institutions.
The new tax regime ensures greater transparency in the sector, which will in turn support small businesses in having greater access to financial resources. Many of you know that, since the beginning of this year, I have had numerous personal meetings with our small entrepreneurs in Georgia’s regions, and I would like to state with all responsibility that this tax reform, for the most, stems from their initiatives.
Once again, I would like to thank all entrepreneurs actively involved in the development of this reform. Importantly, I would like to reassure them in person that we have fulfilled one of the most important promises expected from us, and it would not be an exaggeration to state that a tax regime for small businesses, which is truly unique throughout the world, is already in force,” Mamuka Bakhtadze stated.
The Prime Minister hopes that corresponding activities from small and medium-size enterprises will be in place from now on.
“The Finance Ministry’s system is standing by to provide every small entrepreneur with adequate assistance. The process of registration is very simple, totally bureaucracy-free. In addition, banks, similar to microfinance organizations, will be able in the nearest future to provide their clients with this service on their own, which will further simplify the process of registering enterprises.
I would like to reiterate that this truly revolutionary tax regime, along with other reforms initiated by us, will enable us further to speed up economic growth in our country. In this regard, our priority lies in ensuring inclusive growth, a type of economic growth that will apply to every Georgian family, our every citizen. It is vitally important to us to have a larger share of small and medium-size businesses in our economy, and this reform, along with other reforms we will implement in the foreseeable future, will precondition the share of small entrepreneurship in Georgia’s economy, resulting in inclusive growth, new jobs and, most importantly, lower poverty rates,” the Prime Minister stated.