Every year that passes since the re-launch of the legal gambling market in Ukraine, the activities of gambling companies bring more and more money to both the state and local budgets. The amount of taxes paid alone has already exceeded UAH 10 billion per year and is still growing. It is also worth mentioning licence fees, which add several billion hryvnias to this amount annually. Even fierce critics of legal gambling admit that this industry is a significant contributor to the Ukrainian budget, which is a clear indication of the success of gambling legalisation.
However, the situation with revenues for the fourth year in a row could have been even better, and the growth in tax payments could have been even more dynamic, if a number of amendments to fiscal legislation had been adopted alongside the basic law On State Regulation of Activities Related to Organising and Conducting Gambling, which would have been necessary to clarify terminology and unify tax rules.
I would like to remind you that the last amendments to the Tax Code of Ukraine regarding the taxation of gambling activities were made back in 2016 and concerned lottery operators. At the moment, there is not even a single specialised gambling terminology agreed upon in different legislative and other regulatory acts! Starting, oddly enough, with such basic concepts as gross gaming revenue (GGR). Its exact definition is still absent. Accordingly, different laws "imply" something.
For example, the basic law states that the State Online Monitoring System should provide "real-time control of gross income of gambling organisers", but the Tax Code, in particular Articles 134, 136, 141 and 145, uses such definitions as "income received from activities in the field of organising and conducting gambling" and "income received from organising and conducting gambling in slot machine halls, reduced by the amount of payments made to the player". But there is no gross income there at all...
And there are many similar examples. All of this works against the development of the industry and scares away large Western investors who cannot calculate costs and expenses and therefore do not want to take risks by investing in the Ukrainian gambling business. As a result, Ukrainian gambling loses significant opportunities for development, and the Ukrainian budget loses money. A special draft law No. 2713-d, which has long been awaiting adoption in the second reading and in general, would help to remedy the situation.
Establishing clear language at the legislative level, especially in the fiscal sphere, and unification in taxation will have several positive consequences for the gambling market in Ukraine, including:
Increasing the level of transparency and predictability;
Reducing administrative barriers;
Promoting investment attraction;
Simplifying state supervision and control over compliance with fiscal regulations;
Strengthening consumer protection;
Stimulating the development of the industry;
Improving the level of market order.
Clear terms and definitions will help market participants:
Better understand their obligations and rights, which will reduce the risk of misunderstandings and conflicts with the tax authorities;
To simplify the process of obtaining licences and fulfilling fiscal obligations, which will make it easier for gambling organisers to do business;
Increase the level of confidence of foreign investors in the domestic gambling market.
As a result, the situation on the gambling market in Ukraine has significantly improved, contributing to its further legalisation, development and stability, and, accordingly, increasing budget revenues at all levels.
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