On February 1, 2025, changes that will affect the tax burden of individual entrepreneurs (IE) in the construction sector will come into force. According to the changes in the “Decree of the Government of Georgia N415 on Special Taxation Regimes”, such IEs will no longer be able to benefit from the preferential tax regime for small businesses.

Until then, sole proprietors working in the construction industry could count on a tax rate of 1%. However, starting from February 2025, income tax for them will increase to 20% if services are rendered to organizations, enterprises or other entrepreneurs.

What does this mean for entrepreneurs?

• Loss of preferential treatment: Individual entrepreneurs in the construction sector will no longer be able to benefit from small entrepreneur status.
• Increase in tax burden: The tax rate will increase from 1% to 20%.
• Need to review business: The innovations may affect the profitability of construction projects, especially for those working with legal entities.

How do you prepare for change?

• Consult with tax professionals: Changes in legislation require professional judgment.
• Consider alternative tax models: It may be worth reconsidering the legal form of the business.
• Prepare your documents in advance: Make sure your financial statements and contracts comply with the new requirements.

These changes have already been discussed in the Parliament of Georgia and supported by the ruling Georgian Dream party. The law in the third reading is expected in the near future.

Prepare for change with ESPERO!

Our company offers a full range of services: from tax planning advice to supporting your business in the new environment. Contact us to optimize your tax liabilities and protect your business.

👉 Contact our experts today to learn how to adapt to the new tax changes!