Loss of small business status: exceeding the limit or violations: what to do under Georgian law

What to do

1. The threshold: a first excess is not a loss of status. Exceeding 500,000 lari in a year (wine and agro-tourism: 700,000) does not cancel the status; the rate becomes 3% (Tax Code of Georgia, Art. 90), applied from the month of the excess to the end of the year (Art. 90). Cancellation applies if the excess occurs in each of 2 calendar years (Art. 89). In that case the status is cancelled from the beginning of the following year, not retroactively (Art. 89).
2. Violations: cancellation for an activity prohibited by the government (Art. 89), or for at least 3 cash register fines within a calendar year (Art. 89). On these two grounds the cancellation runs from the beginning of the current year, retroactively (Art. 89). For other grounds, at the entrepreneur's application, it runs from the 1st day of the following month (Art. 89). If the person ceases to be an entrepreneur, it runs from the date of that ground (Art. 89). Check that the date in the decision matches the ground.
3. After cancellation, the general regime applies from the date of cancellation: 20% (Art. 81). VAT: if turnover exceeds 100,000 lari in any 12 months, an application for VAT registration is due no later than 2 working days later (Art. 165). Small business is not exempt from this (Art. 92).
4. Appeal: a tax authority decision is appealed within 30 days of service (Art. 299). The dispute has two stages: the Revenue Service, then the Dispute Resolution Council of the Ministry of Finance, or the court (Art. 297). Failure to use a cash register for cash payments carries a fine of 200 lari (Art. 281). For cash register fines, the Revenue Service's decision on appeal goes directly to court (Art. 299), so contest each fine.
5. Restoring the status requires a new application once the conditions are met.
6. Where to apply: Revenue Service (rs.ge), then the Dispute Resolution Council of the Ministry of Finance or the court.
7. Evidence: the decision and its service date, monthly declarations, income by year, records of cash register fines.
8. Traps: assuming the status is lost at the first excess over the threshold; accepting recalculation 'from the start of the year' for a threshold excess (retroactivity applies only to prohibited activity and cash register violations); forgetting VAT, whose threshold (100,000 lari) is much lower; missing the appeal deadline; not contesting individual cash register fines.

Be sure to check

• 500,000 lari threshold: in the first year, 3% from the month of the excess to year-end; the status is cancelled from the following year if the excess occurs in each of 2 years
• prohibited activity or 3 cash register fines in a year: cancellation from the beginning of the current year
• after cancellation: general regime at 20%; VAT registration is a separate matter
• appeal within 30 days; two-stage dispute; cash register fines go to court