The General Exemption Rule for Gambling Services
The provision of services by means of lotteries, gambling and profitable games is exempt from VAT under article 171 of the Tax Code of Georgia. This norm sits in the list of exemptions for a separate category of operations and creates, for a gambling operator, the foundation on which it prices its own services and reports to the tax organ. Precision is essential: the exemption covers the provision of services by means of lotteries, gambling and profitable games — with the exception of certain services carved out by another norm of the Code, whose detailed content must be verified against precisely that norm.
Establishing the exact basis of the exemption is practical in every case where the operator's revenue is formed from different types of activity: article 171 concerns gambling services specifically and does not automatically extend to everything the operator does. Therefore the tax qualification of each transaction must be assessed separately.
What „Exemption Without the Right of Deduction“ Means for an Operator
The exemption under article 171 is of a special character: it operates without the right of VAT deduction. In practice this means that on gambling services the operator does not add VAT and does not pay to the budget the VAT arising from the service rendered; but at the same time it cannot deduct the VAT paid on goods and services acquired for the activity either — the VAT of purchases remains a cost of the operator.
This construction must be reflected in the budget as a separate line: when planning investment and operating purchases, the comparison of prices is made precisely by taking into account the absence of the deduction right. For an operator whose revenue comes mainly from exempt activity, VAT accounting and documentation begin to work under a different logic than for an ordinary payer.
The Supply of Related Goods
The second part of article 171 contains an additional rule: exempt from VAT without the right of deduction is the supply by a taxable person of goods that have been used by it for an exempt activity, where no VAT deduction right arose or was used upon the acquisition of those goods. Thus, if the operator acquired the goods at a time when no deduction was applied, the subsequent disposal of those goods also proceeds under the exempt regime.
This norm matters when planning the asset cycle: for example, the supply of equipment or inventory used in the exempt activity, where no deduction occurred at acquisition, does not change the tax regime. In each concrete case, however, the history of the use of the goods and the fact of the deduction right must be documented.
Invoices and the Exception
The general rules for issuing invoices are established by other norms of the Tax Code, so the details of recording on an invoice for exempt services must be verified against precisely those requirements. What follows from article 171 is the nature of the basis: services by means of lotteries, gambling and profitable games contain no VAT, because they are exempt — and the exemption operates without the right of deduction.
As for the exception: under the text of the article, the exemption does not extend to certain services envisaged by another norm of the Code. The exact content and scope of that norm must be verified independently in the consolidated Code, since an incorrect reading will either cause the operator to charge unnecessary VAT or lead to risky declaration. We advise our clients to determine the final tax qualification always in reconciliation with the current edition.
Frequently Asked Questions
Are gambling services taxed with VAT?
No. The provision of services by means of lotteries, gambling and profitable games is exempt from VAT under article 171 of the Tax Code — with the exception of certain services provided for by another norm of the Code.
Can the VAT on purchases be deducted?
No. The exemption operates without the right of deduction, so the VAT paid on goods and services acquired for the exempt activity cannot be used for deduction and remains a cost.
What happens upon the supply of used goods?
Under the second part of article 171, where goods have been used for the exempt activity and no deduction right arose or was used upon their acquisition, the supply of those goods is also exempt.
Where are the details of invoicing found?
The general invoice regime is established by other norms of the Code; article 171 determines the starting point — the service is exempt — and the remaining details require verification against the current edition.
How We Help on Legal.ge
The Legal.ge team provides full support to gambling operators on VAT matters: we assess the qualification of your operations under article 171, distinguish the exempt and taxable parts, and help build the correct structure of accounting and documentation.
Contact us through Legal.ge — we will align your tax calendar and purchasing plan with the exemption regime so that you run VAT accounting without defects.