The Architecture of the One-Per-Cent Regime
The small-business status is the central element of the special-regime system of the Tax Code: an entrepreneur natural person, within a defined ceiling, receives the right to taxation at a one-per-cent rate. All five pillars of the regime — who is eligible, how the status is put at risk, how the rate works, what accounting is required and what payroll relief exists — must be read as a single structure. A boundary is noted too: the administrative procedure of granting the status is set by an act of the Minister of Finance, and the prohibited and excluded types by a government act — those acts must be analysed before planning a structure. A special regime means that, instead of the general rules, the special rules of the Code apply — and they follow the status: losing the status means leaving the special taxation regime.
Eligibility, the Ceiling and the Risks
Small-business status may be granted to an entrepreneur natural person; the ceiling is aggregate income of five hundred thousand lari in a calendar year — seven hundred thousand for subjects of wine tourism and agrotourism. To obtain the status, the person applies to the tax organ, which issues a certificate. The status is voided in five cases: exceeding the ceiling in two calendar years; applying before the end of the calendar year; carrying on a prohibited activity; being fined not less than three times in a year for breaches of cash-register rules; and non-conformity with the conditions. The timing rules of voidance are also precise — upon exceeding, the status is void from the beginning of the following year; where the person applied before the end of the calendar year — from the first day of the month following the month of application; for a prohibited activity or cash-register fines — from the beginning of the current year; and for non-conformity with the conditions — from the date the respective ground arose. Upon cancellation of the status, the accounting of the existing goods balances is likewise determined by an order of the Minister of Finance.