Chaos' As Ukraine Skips Vote On Tax, Regulators

December 20, 2021
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A vote to solve Ukraine’s gambling commission conflict and reduce its tax burden did not take place last week as planned, forcing ministers to scramble and leaving the industry looking to 2022 for long-term solutions.

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A vote to solve Ukraine’s gambling commission conflict and reduce its tax burden did not take place last week as planned, forcing ministers to scramble and leaving the industry looking to 2022 for long-term solutions.

Long-awaited amendments to the Ukrainian gaming law were submitted to Verkhovna Rada (parliament) last week, but were ultimately ignored, meaning they will not be addressed again before next year.

Gambling was re-legalised in Ukraine in 2020 by the adoption of a swiftly written law that contains two conflict provisions on which state bodies should appoint members of the gambling commission: parliament or the Cabinet of Ministers.

A vote was expected on amendments to solve the conflict, not least because the contracts of current commission members expire this month and the new board needs to be re-elected.

Ukraine’s gambling regulation makes it impossible to carry out practically any actions to open, expand or even adjust an existing casino business without the approval of the gaming commission.

The current members of the board of the gaming commission were elected on short-term contracts by the Cabinet of Ministers, bypassing the conflict at the centre of the law, and sources suggest ministers may be forced to take the same steps again.

A person close to the political process told VIXIO GamblingCompliance that interviews are planned for December 21 and the new members will be elected and appointed a week later, on December 27.

The current commission has been beset by accusations of graft, with its deputy leader removed earlier this year over allegations of taking cash to smooth licence applications.

The gambling industry had also been waiting eagerly for an expected solution to the country’s tax problem, which was among the issues scheduled to be voted on last week.

Operators currently have to pay high licence fees, an 18 percent gross gaming revenue tax and another 18 percent income tax as a result of rules set by an older piece of tax code legislation.

This is on top of a 19.5 percent winnings tax, which, among other changes, was expected to be charged only on the sums above 48,000 hryvnias ($1750) if amendments were adopted.

Business leaders were told by ministers that the tax issues would be fixed swiftly after the main gambling law was passed, but more than a year and a half later little progress has been made.

Boris Baum, a gaming commission advisor and key figure in passing the 2020 gambling law, said that the lack of a vote "causes indignation in everyone".

“The main law was adopted, but no amendments to the tax code were made. It's just some kind of legal chaos. It is not clear why the deputies do not pay attention to this. This is a big disappointment. And we will figure out what to do with this story," he said.

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