The global practice of developing new markets and economic sectors is similar in all civilized countries. First, the basic legislative provisions are adopted, then the state regulations and a system of permits, restrictions and responsibilities and protection of clients of new business are established. After that, changes in fiscal legislation are adopted, starting with the most simplified and preferential form for a certain period of time, which is required for the formation of the said markets and industries.
This is how the legalization of the gambling business began in Ukraine in 2020, after a long period of bans. However, due to a series of political inconsistencies, and soon a full-scale Russian invasion to Ukraine, tax changes in the required scope were never approved by the Parliament. This deterred large Western corporations from investing in Ukrainian gambling sector for several years in a row. Despite the war, there is a desire among investors to invest in the Ukrainian economy, but everyone needs clear, transparent and stable rules of the game in the market. If they are in place, then you can count on project financing, if not...
Unfortunately, tax policy in the field of gambling has followed the path of increasing tax pressure, which may give a certain surplus immediately, but strategically deprives the industry of development prospects. This was manifested in two decisions of the Parliament:
- concerning the prohibition of gambling businesses on the simplified taxation system (the relevant draft law No. 8079 was adopted in the second reading and in general at the beginning of January 2023);
- concerning the establishment of the tax rate on gross gaming revenue (GGR) in the amount of 18% (the corresponding draft law No. 8176 was approved at the beginning of August 2023).
In addition to that, inspections of the gambling businesses were resumed from 1 August 2023,.
Such a fiscal and administrative burden will only make it more difficult for investments to enter Ukrainian gambling industry. Let me remind you that the introduction of the GGR tax in the conditions when the State Online Monitoring System (SOMS), which was supposed to provide control over all financial transactions of legal gambling business organizers in real time, has not become operational yet, is assessed by investors as a rather risky and potentially corrupt step.
Instead of increasing the pressure on the legal gambling business, it would be better to focus on combating illegal businesses, especially those with russian roots. If someone thinks that this problem is "insignificant" or its importance is "exaggerated", then I would like to remind you that according to the annual report of Commission for Regulation of Gambling and Lotteries, within the framework of the implementation of measures to moving economic activity in the field of organizing and conducting gambling games and lotteries in 2022 out of the shadow, the following was revealed:
- 1,643 websites that conduct gambling activities in the territory of Ukraine without relevant licenses;
- 55 websites that organize and conduct lotteries on the territory of Ukraine without relevant licenses;
- 38 legal entities that are residents of the russian federation, of which:
* 25 work online (23 bookmakers and 2 lottery operators);
* 4 – work in land establishments (3 bookmakers and 1 lottery);
* 8 operate within four gaming zones on the territory of the russian federation (gaming establishments of casinos and slot machines);
* 1 non-banking credit organization (defined at the legislative level as a monopolist in accounting for the acceptance of all bookmaker bets in the russian federation).
Based on the discovered facts, 63 packages of documents were formed and sent to the Bureau of Economic Security of Ukraine and the Security Service of Ukraine during 2022.
Therefore, the field of activity for law enforcement officers to eradicate illegals from the Ukrainian economy is quite wide. Instead, legal business should be comprehensively supported, given the opportunity to develop and attract Western investments, so that later this development is converted into an increase in tax revenues of the state budget of Ukraine.