Ukrainian Industry Calls For State Monitoring Of Gambling Amid Tax Hike Fears

January 9, 2023
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A trade group representing gambling operators in Ukraine is calling on the government to accelerate plans for an online monitoring platform to forestall the activation of a higher tax rate.

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A trade group representing gambling operators in Ukraine is calling on the government to accelerate plans for an online monitoring platform to forestall the activation of a higher tax rate.

The Ukrainian Gambling Council (UGC) has petitioned the country’s government to launch a state online monitoring system (SOMS) to control the country’s gambling operators and ensure their compliance with licence terms.

Anton Kuchukhidze, the association’s chairman, cautioned that if Ukrainian lawmakers do not accelerate their work on introducing the online tool, licensed gambling operators could face an additional tax rate.

In an op-ed piece for local news agency Ukrainian News Agency, Kuchukhidze referred to Draft Law No. 2713-d, which amends the Tax Code of Ukraine regarding the taxation of income from the organisation and conduct of gambling and lotteries.

“The issue is that, in the updated version of Draft Law 2713-d there is a provision: if the SOMS is not introduced by April 2023, then an additional 10 percent tax will be introduced in the field of gambling,” the chairman said. “This means that, on top of the basic tax rates paid by any business, another tax of 10 percent will be introduced.”

Last December, the Verkhovna Rada, Ukraine’s unicameral parliament, was scheduled to vote on the draft law, but the vote was cancelled last minute, according to Kuchukhidze. Should the legislative process be further delayed, this could put Ukraine’s licensed operators in a difficult position, he said.

“In order to prevent the destruction of the achievements of the reform of gambling [in Ukraine] and avoid destroying the industry which brings billions to the state budget every year, it is necessary to implement the SOMS as soon as possible and pass Draft Law 2713-d,” according to the chairman.

“In the worst case scenario, the legal gambling sector, which is already going through very difficult times, will have to face an excessive burden” due to the additional tax rate that could be imposed next year, he said.

In his op-ed, Kuchukhidze also expressed the association’s support for Ukraine’s Commission for the Regulation of Gambling and Lotteries (KRAIL).

“The KRAIL is making every effort to finally implement the SOMS. And it is important to understand that the SOMS is primarily a technical solution,” he said.

“The existence of a technical solution for the SOMS has also been confirmed by the KRAIL’s head Ivan Rudy in his recent interview. It really exists, there are still some technical points that need to be completed, and then the system will be suitable for testing,” he claimed.

Ukraine’s licensed gambling industry operates under the provisions of the nation’s gambling law, which was signed by President Volodymyr Zelenskyy on August 11, 2022.

As of late September 2022, there were eight casinos and 60 slot halls licensed in the Ukrainian market. This said, due to Russia’s ongoing invasion of Ukraine, only five casinos and 39 slot halls are actually open to local players, according to figures from the KRAIL.

In late 2022, the Ukrainian regulator announced that two legislative proposals related to gambling were added to the 2023 legislative work plan of the Verkhovna Rada.

The first legislative proposal introduces new regulations related to wartime operations of the local gambling industry. The second draft law would create a blocklist of unlicensed gambling operators and arm the KRAIL against falsified data submitted by companies applying for gambling licences, among other changes.

Headquartered in the country’s capital Kyiv, the UGC has 22 full members and five associate members, including local bookmakers and casinos, according to data from the association.

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