Georgia Tax for E-commerce Entrepreneurs

E-commerce is the category where Georgia's 1% regime most often does not apply as expected. Goods, VAT and activity classification all change the answer, and they need checking before any move.

Goods are treated differently from services

The Small Business regime was designed with small-scale entrepreneurial activity in mind, and certain trading activities are treated differently or excluded. Selling physical products is not automatically inside the regime simply because the shop is online.

VAT will usually reach you first

The VAT registration threshold is far lower than the Small Business turnover threshold, so a growing store can face VAT obligations while still being well inside the 1% limit. Cross-border sales add destination-country VAT rules on top of the Georgian position.

• Check activity classification before registering.
• Track the VAT threshold separately from the Small Business threshold.
• Consider destination-country VAT and marketplace collection rules.
• Remember that turnover-based tax ignores cost of goods sold.

Cost of goods sold is invisible to a turnover tax

A store with a 20% gross margin pays the rate on the full sale price, not on the margin. For low-margin retail, this alone can make a profit-based structure more attractive.

Where the platform and stock sit

Warehousing, fulfilment centres and stock held in another country can create a taxable presence there, independently of where you are registered. Dropshipping does not automatically avoid this.

Frequently asked

Can an e-commerce business use Small Business Status at all?

Some can, depending on the precise activity and how it is classified. It is the category where we most often advise confirming eligibility in writing before registering.

Does dropshipping change the analysis?

It changes the logistics, not the principles. Turnover is still turnover, VAT rules still apply in the destination market, and supplier and stock locations can still create presence elsewhere.