Against the background of expectation regarding the adoption of draft law 2713-д aimed at systematizing the gambling taxation system, the number of manipulations around this draft law has increased. Opponents of legalization insist that the draft law will abolish half of the gambling taxes and significantly reduce the budget revenues from license fees and taxes. In reality, these statements are nothing more than a fake.
Draft law 2713-д does not in any way reduce the financial burden on the gambling business. Its main objective is to create a balanced tax system that will take into account the State’s interests in taxes and license fees, as well as interests of gambling operators related to the development of their business.
The current tax system makes it impossible for legal gambling operators to fully develop their companies due to a significant tax burden. In fact, legal operators may now invest, but slowly and earn little, thus making the gambling industry unattractive for both domestic and foreign investors.
Without developing the sector, state budget revenues will not grow. Legal operators will not create new jobs and contract with other industries. They will also invest less in social responsibility, sponsorship, and charity projects. This will significantly reduce the combined effect of the gambling legalization on the economy, which would be disadvantageous for both the State and business.
Now, let us analyse the tax changes proposed by the draft law 2713-д and what it “reduces”:
1. Income tax. The draft law envisages two types of the income tax for gambling sector. The standard 18% tax is the same as for any other company, as well as a special 10% GGR tax that applies to gross gaming revenue. That is, in addition to the regular income tax, legal operators will pay an additional 10% tax.
2. Taxation of players. Legal operators will continue to act as players’ tax agents, i.e. transfer 18% personal income tax and 1.5% military levy on their winnings to the budget. Only the amount of the winnings subject to these taxes is increased. Winnings in excess of eight minimum wages (at the moment, personal income tax and military levy are imposed on all winnings) will be subject to personal income tax and military levy. However, this may result in the outflow of players from illegal gambling establishments and an increase in the number of foreign players, and not in decreased budget revenues.
3. VAT. Draft law 2713-д fails to envisage any changes in this respect. All activities of legal gambling operators subject to VAT according to the current tax legislation will continue to be subject to this tax.
4. License fees. They will not be reduced for one simple reason: right now before the draft law 2713-д is adopted, only online casinos, betting operators and slot machine operators pay a triple license fee. High license fees were paid by land-based casinos, gambling halls and online poker, and will continue to be paid. Initially, such high license fees were established for these gambling sectors, because according to the specialized research findings they are the most popular in the world, and Ukraine is no exception. That is why, before the State introduces an online monitoring system and starts to calculate GGR, it is decided to impose a triple license fee on these market segments. An advance payment, so to speak.
In short, draft law 2713-д aims not to reduce budget revenues, but to enable active development of the legal gambling industry in Ukraine. Again, we must not forget that the adoption of adequate tax legislation will greatly affect illegal market participants interested in failure of the reform and the return of the status quo that existed before the legalization of gambling in Ukraine.