Tax certainty - how GGR unification attracts investment and strengthens public finances

The main goal of any business is to make a profit. To understand how much a business earns, it is necessary to have a clear understanding of its own cost mechanism. The tax burden is one of the key items of expenditure, so the more transparent the taxation system is and the more clearly defined the tax rates are, the easier it is for businesses to develop, plan, and invest. Unfortunately, at present, tax terms for gambling are not defined in Ukraine. Moreover, even the basic terminology has not been defined. This hinders the development of legal gambling and increases the risk of strengthening the illegal segment.

Tax legislation is the foundation of any regulatory system, especially when it comes to the commercial sector. It determines how attractive the sector is for investment. Even with complex and strict licensing requirements, gambling companies are willing to comply if they understand that the market allows them to make a profit and, most importantly, to do so under clear rules.

Unfortunately, Ukraine does not have a clear taxation system for the gambling business. Moreover, concepts such as winnings and gross gaming revenue (GGR) still do not have a unified definition. The absence of these basic aspects makes it impossible to create clear taxation rules. As a result, foreign companies either do not invest in the Ukrainian market or invest very cautiously, as part of their investments is "eaten up" by additional tax burdens.

This creates two global problems:

1. Excessive taxation of winnings scares players away. They ask a logical question: why should I go and play with legal operators if they will take a bunch of taxes from my winnings? And so they go to illegal operators. I think everyone understands the negative consequences of the strengthening of illegal operators against the backdrop of the weakening of the legal segment.

   
   

2. Introduction of SOMS. In order to control the payment of taxes by licensees, the state needs to determine what taxes, in what amount, and how they should be paid. A logical question arises: how can control be exercised if there is still no legally established approach to calculating GGR?

   
   

Obviously, tax changes in terms of tariff rates are debatable and require time to determine both their size and the approach to their application (fixed, progressive, etc.). However, it is already necessary to at least bring the terminology of the current tax legislation into line with international and European standards. This is a step that will benefit everyone — the state, players, and business.

Streamlining the tax base and unifying the categories of winnings and gross gaming revenue (GGR) is not just a technical procedure, but a key tool for attracting investment from legal operators and stabilizing state revenues. It is also a tool for protecting the rights of players and preventing the spread of gambling addiction. The examples of Lithuania, where the tax is 13% of GGR with clear definitions, and Estonia, which has reduced taxes to 4-6% thanks to a transparent base, show that when the rules are clear and predictable, businesses invest with confidence.

A unified tax base will prevent manipulation and an "individual" approach to taxation, where controversial tax issues are resolved not according to established rules, but depending on the vision or desires of a particular tax authority. This approach will also minimize the outflow of players into the shadow sector, which will not only increase their level of protection but also provide additional revenues to the state budget. As a result, Ukraine will be able to move closer to a model where the legal market generates stable and predictable income, and investors gain more freedom in using their own funds.