Ukraine Reinstates 18 Percent Online Casino Tax

August 16, 2023
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Ukraine has reintroduced an 18 percent tax rate on gross gaming revenue of online casinos previously abolished under martial law.

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Ukraine has reintroduced an 18 percent tax rate on gross gaming revenue of online casinos previously abolished under martial law.

The bill to change the tax rate was adopted by parliament with 226 votes last week and some Ukrainian deputies immediately confirmed the increase in taxation through their Telegram channels, celebrating a small victory in the battle against the state budget deficit.

Deputies anticipate that UAH1.5bn ($40m) will be paid additionally into the state treasury.

The change came via a seemingly unrelated bill to create tax exemptions for maritime trade, which in the process replaced an existing tax exemption for online casino products in Ukraine’s tax code.

In mid-April 2022, the country’s parliament supported a "temporary" amendment to the tax code that allowed gambling operators, along with other types of businesses, to switch to a simplified taxation system, paying only a singular 2 percent tax on turnover.

Almost the entire gambling industry in the country has transitioned to this simplified taxation system, resulting in significantly reduced contributions to the budget.

Local media reports indicate that before the transition, gambling companies were paying an average of UAH200,000 ($5,500) in taxes per day, whereas now they only pay UAH23,000 ($650).

However, in January 2023, the Ministry of Finance developed a bill to abolish a number of tax incentives for businesses that the Verkhovna Rada had introduced in the first months of the military actions.

The document was prepared to fulfil Ukraine's obligations under a new memorandum with the International Monetary Fund, followed after Ukraine's budget for the year 2022 faced a deficit of more than UAH900bn ($24.5bn).

Since then, online casinos in Ukraine have been paying an 18 percent corporation tax and 1.5 percent military levy. As a result, the gambling industry paid four times more in taxes for the first half of 2023 compared with the previous year.

Now, with the re-introduction of the 18 percent GGR tax, in addition to those levies, the government expects gambling operators to bear a tax burden comparable to those which existed in peacetime.

When Ukraine re-regulated its online gambling sector in 2020, the industry complained of double taxation, but anticipated the set-up would be temporary until a central state monitoring system was implemented, but plans were complicated by Russia’s full scale invasion of the country that began in February 2022.

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