As of February 1, small business owners in the construction sector will no longer benefit from a preferential tax rate, resulting in a significant tax hike. Under the new regulations, self-employed individuals providing construction services will no longer qualify for the 1% special tax rate applicable to small businesses. Instead, their income from construction services will now be taxed at a 20% rate.
According to bm.ge, the ruling Georgian Dream party initiated these changes in December 2024, initially planning for them to take effect on January 1, 2025. However, during a session of the Parliamentary Finance and Budget Committee, Georgian Dream MP Bejan Tsakadze opposed the abrupt enforcement of the changes, arguing that the sector needed more time to adapt. Despite a temporary delay, the new tax regulations have now come into force.
Tsakadze maintained that even the February 1 deadline did not allow sufficient time for small entrepreneurs to adjust, but the committee ultimately dismissed his concerns.
The Ministry of Finance expects the tax increase to generate an additional 200 million GEL in state revenue.
