The Legal Framework of VAT Registration
A taxable person for VAT purposes is any person who independently carries on any kind of economic activity in any place, regardless of the purpose and result of that activity. Economic activity is the activity of persons carrying out supplies of goods and provision of services, except one-time or irregular activity, and also the use of property for the purpose of receiving regular income. The supply of a non-residential building counts as economic activity regardless of its one-time character. The activity of a state organ is not treated as economic activity, except for a defined list — including telecommunications services, the supply of water, gas and electricity, and others. These definitions are the foundation of the registration duty: whoever carries on economic activity is a taxable person.
Mandatory and Voluntary Registration
The threshold of mandatory registration is fixed numerically: the taxable person is obliged, from the day the aggregate amount of VAT-taxable operations carried out in any continuous 12 calendar months exceeds 100 000 lari, to apply to the tax organ for VAT registration no later than 2 working days thereafter. The obligation to account and pay arises from the moment of the taxable operation by which the aggregate exceeded the threshold. A person producing excise goods must register before supplying them; a person created by reorganization — before the first taxable operation, but no later than 10 days from completion of the reorganization; an enterprise or partnership receiving goods or services by way of contribution follows the same rule. At the same time a person may register as a VAT payer voluntarily — a route important for those who need the right of credit before reaching the threshold. The computation of the threshold has its own rule: in determining the aggregate, VAT-exempt operations are not counted — apart from exempt operations connected with financial or immovable property where they constitute the person’s principal activity, and export operations; for the holder of fixed-tax status, income from that activity is likewise not counted.
Cancellation of Registration and Other Liable Persons
Registration is not perpetual: where the aggregate amount of the person's taxable operations in the last 12 calendar months does not exceed 100 000 lari without VAT and a year has passed since the last registration date, the person may apply for cancellation; with the person's consent the organ may also cancel the registration on its own initiative. Registration is cancelled on liquidation, on death, or on the person's declaration — from the first day of the month following the application. A separate rule defines persons obliged to account and pay VAT without registration: the importer of goods, the tax agent on a reverse-charge operation, the authorized person carrying out realization of goods within enforcement-securing measures, the realizer of an insolvency mass, and a taxable person not established and not ordinarily resident in Georgia on defined services.
Liability and Fines
Activity without registration attracts a fine directly: the person is fined in the amount of 5 percent of the amount of the VAT-taxable operations carried out during the period of activity without registration. Failure to issue a tax invoice at the buyer's request entails a fine of 100 percent of the VAT amount on the taxable operation, and the issuing of a fictitious or forged invoice — a fine of 200 percent of the VAT amount indicated in the invoice. Knowing these fines puts the decision on registration into a numerical context: deferring registration and the fine together often exceed even the benefit of the credit.
The Practical Planning of the Registration Decision
The registration decision is a matter of advance computation: taking into account the turnover accumulated over 12 months and the volume expected under contracts shows precisely at what moment the aggregate reaches 100 000 lari — and the 2-working-day term begins exactly then. This planning matters for mandatory and voluntary registration alike: voluntary registration opens the credit yet imposes the burden of accounting, and comparing these two effects is the core of the decision. In activity involving excise goods there is no choice at all: registration is required before the first supply, which precedes the turnover threshold.
Frequently Asked Questions
Below we answer the questions most frequently asked on this subject.
When does registration become mandatory?
When the aggregate of VAT-taxable operations in any continuous 12 calendar months exceeds 100 000 lari — the organ must be applied to no later than 2 working days from the day of exceeding.
Is voluntary registration possible?
Yes — even before reaching the threshold, where the right of credit is needed.
When may registration be cancelled?
Where the last 12 months' operations do not exceed 100 000 lari without VAT and a year has passed since registration — at the person's request; automatically on liquidation and death.
What fine follows work without registration?
5 percent of the amount of the taxable operations of that period.
How We Help on Legal.ge
VAT registration is loaded with deadlines and computations. On Legal.ge you can consult a tax lawyer who will determine the moment of your duty and help you through the procedure. Submit a request on the site and receive qualified assistance.