Closing a sole trader (IE) in Georgia: what to do under Georgian law

What to do

1. Deadlines first: when a sole trader ceases activity, they must file a return on total income and deductions within 30 working days (Tax Code of Georgia, Art. 153); after that, no returns are filed until activity resumes (Tax Code, Art. 153). With micro-business status, the return is due within 30 working days of ceasing activity (Tax Code, Art. 93). Until the return on cessation is filed, a sole trader with small business status must file the return and pay the tax monthly, no later than the 15th day of the following month (Tax Code, Art. 93). Penalties: for a return filed up to 2 months late, a fine of 5% of the tax due on it; for more than 2 months, 10% (Tax Code, Art. 274). However, if the tax on the return is zero, no late-filing penalty is imposed (Tax Code, Art. 274). On unpaid tax, a late-payment penalty of 0.05% applies for each day of delay (Tax Code, Art. 272).
2. Tax steps: small business status is cancelled upon application, from the first day of the month following the application (Tax Code, Art. 89). If the person was a VAT payer, VAT registration is cancelled upon application, from the first day of the following month (Tax Code, Art. 165¹). Voluntary deregistration is possible if turnover did not exceed GEL 100,000 and one year has passed since registration (Tax Code, Art. 165¹).
3. Registry: a sole trader's registration is cancelled upon the person's own application to the Public Registry (Law of Georgia on Entrepreneurs, Art. 91). From abroad, the application may be filed through a representative; the power of attorney must be certified by a notary or with an electronic signature (Law on Entrepreneurs, Art. 4).
4. Debts: after the registration is cancelled, the sole trader remains the person liable; debts do not disappear (Law on Entrepreneurs, Art. 91). A sole trader is personally liable for business debts with all of their property (Law on Entrepreneurs, Art. 2). Closing the sole trader registration does not release the person from tax or contractual debts.
5. Where to apply: Public Registry (Public Service Hall), for cancellation of registration; Revenue Service (rs.ge), for returns, status and VAT.
6. Evidence: access to the rs.ge account, bank statements, income records for the period; ID; a power of attorney with apostille and translation, if it is issued abroad.
7. Pitfalls: closing the sole trader in the registry without filing the return on cessation of activity; a dormant sole trader with small business status, for whom monthly returns continue to fall due; assuming that closing a sole trader writes off debts, when the person remains liable.

Be sure to check

• return on cessation of activity within 30 working days; no returns are needed after it
• cancellation of sole trader registration in the Public Registry upon application (can be done through a representative)
• waiver of small business status and VAT deregistration upon application
• penalties for late returns (zero tax: no penalty) and late-payment interest
• a sole trader's debts remain the person's personal debts