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Progress in the introduction of the State Online Monitoring System is a good thing, but investors are waiting for tax changes

The end of last year saw many developments in the field of gambling due to the activity of the government in addition to the growth of license payments. The draft decision on the functioning of the State Online Monitoring System (SOMS) was approved. Undoubtedly, this is an important step for the completion of the gambling legalization reform. However, it is important to understand that the introduction of SOMS without the adoption of appropriate tax changes will not have a positive effect on the legal market. That is why the next step should comprise the introduction of tax changes, proposed, in particular, by Draft Law 2713-d as soon as possible.

On 19 December, the Cabinet of Ministers of Ukraine finally adopted the Resolution on the approval of the Procedure for the Functioning of the State Online Monitoring System in the gambling sector. This is one of the steps that representatives of legal gambling have been waiting for a long time and which will finally allow streamlining the process of monitoring financial and other interactions between players and licensed gambling operators.

The monitoring system is intended, in particular, to do the following:

- Receive and transmit information from the relevant gambling equipment in real time to ensure the possibility of instant control of transactions by authorized bodies.

- Protect transaction information from loss, theft, distortion, forgery and other unauthorized actions regarding its destruction, modification and copying.

- Control the circulation of funds in the legal gambling sector and provide information on the amount of the tax base of the relevant gambling organizers.

- Receive and store information about bets accepted, winnings paid, payments made and other transactions.

As you can see, the approved Procedure establishes the legal framework for electronic accounting of the cash turnover of legal gambling organizers and introduces a mechanism for monitoring payment of taxes by them. This is certainly a very good development, as it will increase the level of accountability and transparency of the market, and will allow better protection of players' interests. However, there is a catch. In order to control the payment of taxes by licensees, it is necessary to determine exactly what taxes they should pay, what the rates should be, how GGR should be measured, etc.

This has not been done yet, as the corresponding tax law has not been adopted. It is clear that tax changes from the point of view of tariff rates are debatable. The high intensity of this discussion has been repeatedly proven by practice. However, at least resolving and aligning the terminological base of the current tax legislation with the international European standards for the effective functioning of the SOMS would be in the interests of the state, business, and market players.

Therefore, it remains unclear, while the government performs the established tasks, why the parliament still does not fully comply with its commitments regarding the legalization of gambling and does not vote for the adoption of tax changes. After all, the groundwork has been done. It is possible to take as a basis the same draft law 2713-d, which was adopted in the first reading, and use it at least in terms of terminological arrangement for the field of gambling. This would greatly speed up the process of full implementation of the SOMS and finally complete the gambling legalization reform. It would also create more favourable conditions for the market operation, and therefore make it more attractive for both domestic and foreign investors.



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