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Position of the UGC Chairman on the non-use of payment transaction registers by gambling operators

In order to create a unified legal approach, I, being the Chairman of the Ukrainian Gambling Council, stress that gambling operators operating exclusively online are not required to use payment transaction registers RRO/PRRO (RROs).

This position is based on the following.

First, this is stated explicitly by the State Fiscal Service of Ukraine. On 20 December 2021, the State Fiscal Service published clarifications on its website in the form of training modules on the RRO application. Their purpose was to avoid mistakes in the RRO application and misinterpretation of the law.[1]

In Module 5.7 of the clarifications, the State Fiscal Service notes that:

-       in case of payment for online services with no physical contact between the seller and the buyer, RRO is not required
-       online services include gambling
-       payment for such online services can be made using means of electronic payment (in particular, a payment card)

Given that, there is no physical contact between an online gambling operator and the player, one could stop at this tax regulator’s clear stand. I think many would be interested in justifications for such a conclusion.

According to the State Classifier of Products and Services of Ukraine DK 016:2010, gambling (including online gambling) falls within Section R “Services in Arts and Entertainment”. So, the organization of gambling belongs to the class of services. Online gambling may be, in fact, considered an online service, which is logical and is set out in Module 5.7.

It is also noteworthy that to correctly apply the Law on payment transaction registers, one should determine the “place of payment” within the meaning of Article 2. The State Fiscal Service has repeatedly noted that if services are provided exclusively in electronic form without physical contact with the buyer, the place of payment cannot be determined, and the use of RRO is not necessary. Examples of such a position are individual tax consultations No. 124/ІПК/20-40-07-10-19 dated 12.01.2021, No. 5129/ІПК/02-32-07-05 dated 10.12.2020, 4368/ІПК/99-00-07-05-01-06 dated 22.10.2022, as well as many other published clarifications. Thus, the approach is based on a systematic analysis of the provisions of the Law on payment transaction registers.

Second, the Law of Ukraine “On Use of Payment Transaction Registers in the Sphere of Trade, Public Catering, and Services” provides for several benefits exempting any company from using RROs, even if it is a payment transaction. For instance, according to Article 9(14) of the Law on payment transaction registers, such registers shall not be applied when making payments for services when such transactions are made exclusively through remote banking systems and/or funds transfer services.

In its letter No. 57-0010/2314 dated 13 January 2021, the National Bank of Ukraine noted that, according to the NBU, “funds transfer services” include, in particular, services of non-banking financial institutions with an NBU license to transfer funds without opening accounts, which enable remote payment for goods (services) by consumers.

Almost all gambling operators, members of the UGC, carry out transactions with gamblers exclusively through the services of such non-banking financial institutions.

There are some other arguments, but I believe the above ones are enough to understand that gambling operators operating exclusively online are not required to use payment transaction registers.

I take the expert responsibility and advise all UGC members not to use RROs.

At the same time, I urge licensed gambling operators, which are not UGC members, to take a principled position in dialogue with the relevant public authorities. The law is on our side, and legal gambling representatives have legitimate reasons not to bother themselves with unnecessary bureaucratic procedures. By consolidating the position of absolutely all legal gambling operators, we might achieve the goal.