Income and expenses estimation rule

According to the situation, which method is used for accounting, taxpayer uses cash method or accrual concept for income and expenses account

While using cash method, taxpayer should estimate incomes from the moment of receiving them and obtaining the right of administration and expenses should be deducted after payment.

While using accrual concept, taxpayer should estimate incomes and expenses according to the moment of obtaining the acceptance right of incomes and estimation of expenses, in spite of actual acceptance of incomes and actual spending of expenses.

Estimation of incomes and expenses 

Person, who is obliged to perform or performs voluntary accounting with accrual resulting from objectives of profit and income tax, has no right to use simplified rule of income and expenses estimation approved by the Minister of Finances of Georgia while payment of tax.

Person registered as a Value added tax payer is obliged to use accrual concept of estimation.

Fine and other penalties stipulated by the contract should be estimated by cash method.

Physical entity has the right to estimate incomes and expenses with cash method, including taxpayers having micro, small and fixed status.

Small business should estimate its expenses in special registration journal of expenses in accordance with the instruction on Form and Rule of Production of Special Registration Journal of Expenses by persons having a status of small business.

While delivering the goods/service, in case of payment in cash with clients, small business is obliged to estimate incomes by using control-cash register.