Anyone researching in English which activities are excluded from Georgian Small Business Status finds a list of about a dozen headings: banking and lending, financial intermediation, investment management, insurance and brokerage, real estate and construction, crypto and exchange services. It is quoted by advisory sites, passed around in forums, and treated as common knowledge in first meetings. It is not in the Resolution. The governing text — Annex No. 4 to Government Resolution No. 415 — contains seven items, and not one of them names a financial activity. This article puts both lists side by side, shows where the false one comes from, and draws the line that actually exists.
Where the rule comes from
Small Business Status sits in Chapter XII of the Georgian Tax Code. Article 88(1) opens it to the “entrepreneur natural person”; Article 90(1) sets the rate at 1 percent. The legislature did not, however, regulate the exclusions itself. It delegated twice, and that split is the key to the whole subject:
- Art. 88(2) — the Government defines the excluded ACTIVITIES implemented in Annex No. 4 to Resolution No. 415. Carrying on such an activity costs you the status.
- Art. 88(3) — the Government defines the excluded CATEGORIES OF INCOME implemented in Annex No. 5. Such income falls outside the 1% base; the status survives.
The difference is not a nicety — it decides the consequence. A prohibited activity costs the status, retroactively. An excluded category of income costs only the preferential rate on that one item of income; everything else stays at 1 percent. Almost every piece of misinformation on this subject consists of conflating the two annexes.
Both are implemented in Government Resolution No. 415 of 29 December 2010 on special taxation regimes, in force since 1 January 2011. It carries five annexes — two for micro business, two for small business, one for exceptions to the micro turnover ceiling — and was later extended by two more for the fixed-tax regime. That is another source of error: reading “Annex 2” while meaning “Annex 4” means reading the list of the wrong regime.
The seven items, verbatim
| Annex No. 4 — what is excluded | What that means in practice | |
|---|---|---|
| 1. Activities requiring a licence or a permit | The catch-all. It captures everything that already needs a Georgian authorisation — banks, currency exchange points, insurers. The current wording is reported to carry an exception for taxi carriage (category M1) in the capital; it is the one change we could not evidence from the primary text. | |
| 2. Activities requiring significant investment | The Resolution qualifies this itself in brackets: production of excisable goods. Item 2 therefore overlaps substantially with item 7 — the redundancy is in the text, not in the transcription. | |
| 3. Carrying out currency operations | The only finance-adjacent item on the list. Exactly what it captures is the open flank of the whole subject — see below. | |
| 4. Medical, architectural, advocacy or notarial, audit and consultancy activity | Expressly including tax consultants. The item that matters most in practice: it hits consulting of every discipline — and with it the most common self-description of location-independent professionals. | |
| 5. Gambling business | Its own regime, its own taxation. | |
| 6. Supply of personnel | Labour leasing, not recruitment placement. | |
| 7. Production of excisable goods | Alcohol, tobacco, fuels. |
That is the complete list. It is closed: what is not on it is not excluded. Software development, design, copywriting, the execution of marketing measures, e-commerce services, translation, photography, assembly, training — none of it appears in Annex No. 4.
The list in circulation — and why it exists
The English version you find when searching for “prohibited activities small business status Georgia” reads differently. It carries headings such as Banking, lending and financial intermediation, Investment management or fund administration, Insurance and brokerage services, Real estate and construction, Cryptocurrency and exchange services, Import, export and trade in restricted goods.
None of those headings is in Annex No. 4. What is equally notable is what the sources publishing them lack: they cite no article, no annex and no resolution number. A list without a citation is not a rendering of a legal text but a summary of what somebody found plausible — and plausibility is a poor guide here, because the Georgian regime works differently at precisely these points from what a European reader expects.
The false list has two traceable origins, and each is a correct statement about something else.
First, Annex No. 2 — the micro-business list. Micro status, with its GEL 30,000 ceiling, has its own shorter list, and its item 6 does read “ვაჭრობა”: trade, with an exception for the resale of goods the person has processed. It was not there from the start — the enacted 2010 version listed five items; trade was added as the sixth by Resolution No. 74 of 14 February 2011. Currency operations and the professional group from item 4 appear there too. Put the two lists side by side and it is immediately obvious why they get confused — and why “trading is prohibited under the 1% regime” is passed on so persistently. The sentence is true of micro business. Of Small Business Status it is not.
Second, Annex No. 5 — the excluded categories of income. That annex does contain financial terms: dividends, interest, royalties, the surplus on the disposal of securities. Summarising turns that into “financial transactions are excluded” — although the annex prohibits no activity at all and merely removes certain income from the base.
What Annex No. 5 actually excludes
The second list is the less well known and, in outcome, often the more important. It names income that is not taxed at 1 percent but under the general rules — and it contains a second limb that nearly every summary drops, though not every rendering of the annex heading carries it identically.
The obvious inference would be that such income does not consume the GEL 500,000 threshold: someone with rental income alongside the operating business would not be brought closer to the 3 percent rate by it. We deliberately do not assert that here. The freely accessible rendering of the annex heading does not carry that second limb consistently, and for a proposition that decides the tax tier of an entire year an unclear text is too narrow a basis. Anyone with meaningful Annex 5 income alongside the operating business should have it settled against the consolidated text — it is one of the few questions in this article where the effort pays.
- Leasing and letting of property since a 2016 amendment expressly including the letting of immovable property
- Income from the granting of loans
- Winnings from gambling
- Gifts
- Surplus on the disposal of immovable property, motor vehicles and securities Georgian "ნამეტი" — the surplus on disposal, not the proceeds
- Inherited property
- Dividends
- Interest
- Royalties
- Income from forgiveness of debt
- Surplus on the disposal of a partner’s participation interest
- Construction services to businesses — since 1 February 2025 Resolution No. 436 of 23.12.2024, Annex 5 item 12 — only towards enterprises, organisations and registered individual entrepreneurs
The construction case nearly everyone renders wrongly
Since 1 February 2025 a special rule applies to construction services, and it is regularly summarised as “construction was removed from the 1% regime”. Three clarifications, each of which turns that statement around:
It is not a prohibited activity. Resolution No. 436 of 23 December 2024 did not add to Annex 4; it added item 12 to Annex 5. Construction is an excluded category of income — the status survives, only that income runs under the general rules.
It bites only towards businesses. What is caught is construction services whose recipient is an enterprise, an organisation or a registered individual entrepreneur within the meaning of the Tax Code. Construction services supplied to private individuals remain inside the 1% regime. Someone renovating flats for private owners is untouched by the amendment.
The reference is to the Georgian classifier, not to “NACE” at large: classifier SEC 006-2016, group 41.2 (residential and non-residential building construction), section 42 (civil engineering) and section 43 (specialised construction activities). The consequence for caught income is the standard rate of 20 percent on income less documented expenses.
What happens when it goes wrong
The consequence of a prohibited activity is in Article 89 of the Tax Code — an article you will not find by searching for a heading about withdrawal, because it is headed “Granting the status of small business” and regulates withdrawal only in paragraphs 2 to 5.
Withdrawal for an excluded activity takes effect from the beginning of the current calendar year. The Georgian “მიმდინარე” — current — is missing from the official English translation; anyone working from it underestimates the reach. In practice: the entire year is re-assessed, outside the preferential regime.
Two things alongside that are rarely mentioned. First, the same retroactivity is triggered by three or more cash-register fines in a calendar year — a compliance risk with nothing to do with the activity list. Second, withdrawal for exceeding the turnover threshold is an entirely different mechanism: it bites only where gross income exceeds GEL 500,000 in two calendar years, in each of them, and then takes effect on 1 January of the following year — not retroactively. The widespread “two consecutive years” is an embellishment: neither the Georgian nor the English wording of Article 89(2)(a) contains the word.
What follows from this
For practice it reduces to four sentences.
Check against the text, not against the summary. Seven items are quickly read. Any list that is longer and cites no source is describing something else — usually micro business or the categories of income in Annex 5.
Separate activity from category of income. One list costs the status retroactively; the other costs only the preferential rate on a single item of income. Conflating them overstates the risk in one case and understates it in the other.
The real danger is called consultancy, not finance. Item 4 is where status is actually lost in practice — not item 3. Anyone advising alongside executing, selling courses or issuing recommendations needs a second vehicle for it.
The delimitation belongs before registration. Not because the authority is strict, but because retroactivity to the start of the year makes every later correction expensive. We check the activity profile against Annex 4 before the application is filed, and draft the register description in Georgian along the lines of what the reviewing officer actually compares it against.
FAQ
Is trading prohibited under the 1% regime?
Not under Small Business Status. The error has a traceable source: Annex No. 2 to Resolution No. 415 — the list for MICRO business with the GEL 30,000 ceiling — does contain "ვაჭრობა", trade, as item 6, with an exception for the resale of goods the person has processed. Annex No. 4, which governs Small Business Status, contains no such item. Anyone reading that trading is "prohibited under the 1% regime" is reading a correct statement about the wrong regime.
Does Annex 4 exclude financial services?
No. Annex No. 4 is a closed list of seven items, and none of them names financial services, financial intermediation, investment management, brokerage, securities, banking or insurance. The only finance-adjacent words in the entire annex are "currency operations" in item 3 and "audit and consultancy activity" in item 4. The long list circulating in English with headings such as "Banking, lending and financial intermediation" or "Investment management or fund administration" is not a rendering of the Resolution text.
Why is consultancy excluded but software development is not?
Because item 4 of Annex No. 4 is a list of professions and follows no industry logic: medical, architectural, advocacy or notarial, audit and consultancy activity — expressly including tax consultants. These are regulated or advice-adjacent professions, not "services" in general. Software development, design, copywriting and the execution of marketing measures do not appear on the list. The line runs where execution becomes recommendation — and it runs by the activity actually carried on, not by the label in the contract.
Did construction lose Small Business Status in 2025?
No, and this confusion is particularly consequential because it produces bad advice in both directions. Resolution No. 436 of 23 December 2024 did not, with effect from 1 February 2025, add to Annex 4; it added item 12 to Annex 5. Construction services are since then an excluded CATEGORY OF INCOME, not a prohibited activity — the status is not lost. And the exclusion is conditional: it bites only where the recipient is an enterprise, an organisation or a registered individual entrepreneur. Construction services supplied to private individuals remain inside the 1% regime.
What happens if I do carry on an excluded activity?
Under Article 89 of the Tax Code the withdrawal takes effect retroactively from the beginning of the CURRENT calendar year — the Georgian text says "მიმდინარე", current, a word the official English translation drops. In practice that means the whole year is re-assessed outside the 1% regime. The second trigger of the same retroactivity is worth noting: three or more cash-register fines in a calendar year. Anyone looking only at the activity list is seeing half the risk.
Can I rely on this article?
On the structure yes; on the wording with one qualification we would rather disclose than have you discover. The consolidated version of Resolution No. 415 on matsne.gov.ge is available only to logged-in users; what is freely rendered is the original version of 31 December 2010. The seven-item structure and the wording are evidenced from it — including the parentheticals in items 2 and 4, which contrary to a widespread assumption are not later insertions but stood in the enacted text from the outset. What we could not evidence from the primary text is the one later change known to us: the exception for taxi carriage in item 1, reported only by a Georgian audit-firm reproduction. For a structural decision involving meaningful amounts, checking the consolidated text is therefore part of the mandate — and, where it pays, a binding ruling.
As at: August 2026. Provisions cited: Tax Code of Georgia Art. 88 (Small Business Status and the delegations), Art. 89 (granting and withdrawal), Art. 90 (rate and base); Government of Georgia Resolution No. 415 of 29 December 2010 on special taxation regimes, Annexes Nos. 2, 4 and 5; Resolution No. 544 of 9 December 2016; Resolution No. 436 of 23 December 2024 (construction services, in force since 1 February 2025); Organic Law of Georgia on the National Bank of Georgia, Art. 50; classifier SEC 006-2016.
On sourcing, disclosed: the consolidated version of Resolution No. 415 on matsne.gov.ge is accessible only to logged-in users; what is freely available is the original version of 31 December 2010, expressly flagged as such. The seven-item structure, the wording of the seven items and the eleven items of Annex No. 5 are evidenced from that primary text — including the parentheticals in items 2 and 4, which already stand there and, contrary to a widespread assumption, are not later insertions. The one thing not evidenced from the primary text is the taxi exception reported for the current wording of item 1. The document card lists the most recent amendment as Resolution No. 19 of 24 January 2025. The official English translation of the Tax Code is roughly eleven years old and out of date in several places; the Georgian text governs. This article is not tax or legal advice.