The Organizer's Taxation Object
The eightieth article of the Tax Code of Georgia determines what is considered the taxation object for a physical person engaged in the gambling business. Under this article, for a physical person who receives income from organizing a slot machine hall and/or organizing gambling games in a systemic-electronic form, the object of income taxation within that part of the activity is the difference between the bets received from players and the winnings paid out to players.
This construction is fundamental: the organizer is not taxed on the full turnover of the game but only on the part that remains between the bets and the winnings paid out. Paid winnings thus reduce the taxation object — which is why their correct accounting and documentation are the central element of determining the tax base.
It is also worth emphasizing the necessity of two-sided accounting: the correct calculation of the taxation object is possible only where both the bets received from players and the winnings paid out to them are recorded simultaneously. Incomplete accounting of either side of these two flows either inflates the object or harms the organizer — in both cases a risk of escalation with the tax organ arises. Therefore, in designing the accounting system, the synchronization of these two flows must be written in as the first requirement.
The Rate Regime
The rates are established by the eighty-first article of the Code. Under the general rule, the taxable income of a physical person is taxed at 20 percent. For the gambling sphere it is determined that the taxable income of a physical person received from organizing a slot machine hall and/or organizing gambling games in a systemic-electronic form — except the part connected with foreign citizens — is taxed at 20 percent.
A separate rate concerns income connected with foreign players: the organizer's taxable income received as a result of the participation of foreign citizens in systemic-electronically organized gambling games and/or systemic-electronically organized totalizator games is taxed at 5 percent. Correspondingly, the eightieth article also envisages a separate object — the difference between the bets received from players holding foreign citizenship and the winnings paid out to those players.
The Organizer's Profile and Other Norms
A distinction of profiles is essential: the rules discussed on this page concern a physical person — an individual organizer. The taxation of the profit of a legal person — an enterprise — is regulated by other norms of the Code and requires separate analysis. A separate question is also the taxation of winnings received by a player, which has its own rules and does not merge with the organizer's taxation object.
It must also be borne in mind that the gambling business fee and the VAT regime are separate taxes: paying the fee and the exempt status of the service do not reduce the income tax — these layers are accounted for independently of one another.
Declaration and Accounting
The deadlines, format and rules of declaration are established by other norms of the Code, so we do not discuss them separately here. What is within the scope of this page: the organizer's accounting must be structured so that the difference between bets and winnings paid out is precisely separated by each part of the activity — including the part connected with foreign citizens, because it is precisely this separation that decides whether the 20 percent or the 5 percent rate applies.
In practice this means that the accounting system must be planned from the outset with two cuts — by type of activity and by the player's citizenship. A qualification error admitted in a declaration requires recalculation and amendments, so pay attention to the structure of accounting when planning the tax calendar.
An additional consideration is the documentary support of the separation: isolating the part connected with foreign citizens requires accounting that associates the player's citizenship with each operation. Where this data does not exist, the correct application of the rate becomes impossible — and in communication with the tax organ such a defect even justifies recalculation at the general, higher rate. Timely reconciliation with a consultant here is not a mere formality — it is an instrument for the protection of the tax base.
Frequently Asked Questions
What is taxed at the organizer's level?
For a physical person — the difference between the bets received from players and the winnings paid out to them. Where income comes from organizing systemic-electronic totalizator games with the participation of foreign citizens — the difference between the bets received from those players and the winnings paid out to them.
What are the rates?
Income from organizing a slot machine hall and systemic-electronically organized gambling games is taxed at 20 percent, while the part connected with foreign citizens — at 5 percent.
Do paid winnings reduce the tax?
Yes — the taxation object is the difference between bets and winnings paid out, so complete and correct accounting of paid winnings directly determines the tax base.
Does this apply to legal persons?
The rules described concern a physical person. The taxation of a legal person's profit is established by other norms of the Code and requires separate analysis.
How We Help on Legal.ge
The Legal.ge team offers full consultation on the taxation of organizers: we will assess the taxation object of your activity, help structure the accounting correctly and determine which rate applies to which part.
Contact us through Legal.ge — we will align your operations with the tax qualification and help you avoid declaration risks.