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SOMS and tax changes

Ukraine entered the new year with an important development for the national gambling sector. The Government supported the project to implement the State Online Monitoring System (SOMS) for the gambling business. For the first time, representatives of the gambling business and the Commission for Regulation of Gambling and Lotteries (CRGL) spoke about the need to implement such a system three years ago. However, Russian aggression and the often non-systematic approach to reforming the gambling sector by the Verkhovna Rada delayed the process of making the necessary decisions for several years.

Consideration of this issue by the Government of Ukraine symbolizes the implementation of much-needed reforms in the field of gambling, the creation of control over the activities of legal market participants, the receipt of revenue and compliance with provisions of the current tax collection legislation.

According to the CRGL, as of 26 December 2023, the state budget of Ukraine received UAH 1.96 billion from licenses for organizing and conducting gambling.

If we take into account the fact that these revenues were provided by the legal gambling business, we can predict that finally the State Online Monitoring System will enable the state and the society to clearly distinguish between the legal and illegal segments, and the difference between the legal and illegal volume of the gambling business eventually will become obvious to everyone.

In addition to fiscal tasks, SOMS can create and constantly monitor the Register of Persons with Limited Access to Online and Offline Gambling Halls, and be a reliable assistant for the realization of the constitutional rights of both individual citizens and organizations.

And one more aspect that we cannot overlook when speaking about reforms in one of the economic sectors: the current legislative framework for regulating the country's gambling industry. Ignoring urgent requests from professional gambling organizers in the market and the lack of legislative solutions created difficult conditions for legally operating companies.

Indeed, gambling is a fairly young field of activity of the Ukrainian economy, compared to any other. However, the legislative process cannot be eternal, if we draw analogy with the dynamic pace of the government and political leadership of the country regarding the processes of European integration

The changes needed to reform Ukrainian gambling sector comprise one of the standards and requirements for the unification of Ukrainian legislation with the European legal framework. Gambling, casinos, bookmaking and lotteries should work according to laws that are understandable for civilized countries. After all, this will contribute to the inflow of investments, and ultimately to the development of this sector of the economy, the modernization of certain regions, where new casinos and gambling halls will be built.

However, while the specialized draft law on the regulation and terminological arrangement of the gambling sector has been under consideration in the parliament for years, the business continues to function and provide revenues to the state budget.

Draft Law 2713-д "On Amendments to the Tax Code of Ukraine and other laws of Ukraine on Taxation of Revenues from the Organization and Conduct of Gambling and Lotteries", registered in the Verkhovna Rada in July 2020, was adopted in the first reading on 15 July 2021.

It has important points that the field of gambling business cannot wait for, namely the introduction of clear changes to the Tax Code on levies on winnings in gambling and lotteries with an understanding of the differences and peculiarities of each field of gambling.

Organizers in the gambling and lottery market believe that organizing and fixing gambling taxes will allow to increase levies due to the transparency and logic of calculations. Draft Law 2713-д proposes a scale of levies for bookmaking activities and betting pools at racing tracks, the organization of gambling in online casinos, slot machine halls and casinos, issuing and holding lotteries.

In addition to that, the legislators tied this fixed scale of levies to the budget to the introduction of the State Online Monitoring System. We should only hope that the Verkhovna Rada would show activity in the matter of consideration of Draft Law 2713-д, since a warring country needs stable cash income, and gambling market participants need transparent rules for conducting business.


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