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.