Ukraine Passes New Bill To Hike Gambling Industry Taxes

January 23, 2023
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Ukraine’s parliament has passed a bill which scraps the inclusion of the gambling industry in the country’s simplified taxation system and returns rates to pre-war levels.

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Ukraine’s parliament has passed a bill which scraps the inclusion of the gambling industry in the country’s simplified taxation system and returns rates to pre-war levels.

On January 19, Bill 8079 was submitted to President Volodymyr Zelenskyy for his signature. As the bill was passed with the support of his party, Sluga Narodu (Servant of the People), it is likely the President will sign it.

In March 2022, shortly after Russia invaded Ukraine, the country’s unicameral parliament (Verkhovna Rada) passed Bill 7137-d, which enabled Ukraine-based companies with revenues of up to UAH10bn (€251m) to switch to a simplified taxation scheme and pay a tax equal to 2 percent of their income instead of an 18 percent income tax and a 20 percent value-added tax (VAT).

Local gambling operators took advantage of this change; however, Bill 8079 is designed to increase the levies imposed on the Ukrainian gambling industry.

“Prior to the transition to the simplified [tax] system, gaming operators paid UAH 200,000 in taxes per day. After the transition to the simplified system, payments of the single tax are in the amount of about UAH 23,000 per day,” Yaroslav Zheleznyak, the first deputy chairman of the parliament’s tax committee and MP for the opposition Holos (Voice) party, said in a post on Telegram.

If the President signs the bill, it will become law the following day and Ukraine’s gambling operators will be required to immediately return to the pre-war taxation system.

Gambling firms will be required to pay an 18 percent tax on profits and a gross gaming revenue (GGR) tax ranging between 10 percent and 30 percent, depending on their type of activity, among other levies. A 10 percent GGR rate will apply to slot halls, an 18 percent rate to casinos and bookmakers and a 30 percent rate to lotteries.

Meanwhile, Ivan Rudy, the head of Ukraine’s gambling regulator KRAIL, has been calling on lawmakers to adopt another bill, 2713-d, which overhauls the industry’s taxation to a 10 percent GGR tax and a flat 18 percent tax on profits.

The draft legislation is also backed by local industry association the Ukrainian Gambling Council (UGC). In addition to this, the association is calling on the country’s authorities to launch a state online monitoring system (SOMS) that will control Ukraine’s gambling operators and ensure their compliance with licence terms.

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

As of September 2022, there were eight casinos and 60 slot halls licensed in the Ukrainian market. However, due to Russia’s ongoing military attack against Ukraine, only five casinos and 39 slot halls are 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 for the Verkhovna Rada.

The first proposal, entitled "On the Specificity of State Regulation in the Sphere of Organisation and Performance of Gambling and Lottery Games During the Legal Regime of Martial Law", imposes new regulations related to wartime operations of local gambling industry players.

The second draft bill, "On Amendments to Certain Laws of Ukraine Regarding the Improvement of Legal Regulation of Activities in the Gambling Market", proposes to create a blocklist for the websites operated by unlicensed gambling operators and creates measures to protect the KRAIL against falsified data filed by businesses applying for gambling licences, among others.

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