Ukraine mulls double-digit taxation of licensed operators
Four separate tax bills to be reviewed as parliament considers GGR-based taxation regime
Ukrainian sports betting operators could be taxed at rates varying between 0% and 25% of gross gaming revenue (GGR) under four different bills being considered by Ukrainian parliament.
The bills, published at the weekend, outline the potential taxation rates payable by online casino and sports betting operators. Under the main draft bill, online casino and sports betting operators would be subjected to a GGR taxation rate of 10%.
A second version of the tax bill includes a tax rate of 12.5% on online casino and 7.5% on sports betting.
The third version recommends a uniform 25% GGR tax applied to sports betting, online casino, slot parlors and lottery operators.
A fourth variant of the bill would remove the tax completely, as well as remove the taxation of operators under Ukrainian corporation tax. In a note explaining this legislation, authors of the bill claim the removal of tax is due to “very large sums” payable by operators in licence fees, something which it claims will make the market less attractive to interested operators.
Under current Ukrainian law, businesses are required to pay corporation tax of 18% in addition to any potential tax levied within the new gambling law.
This means operators could potentially be liable to pay total tax rates of 28% under the so-called main draft tax law, rising to 43% under the third draft of the law.
However, the taxation rate applicable to online poker operators has been omitted from three of the four bills under consideration.
Ilya Machavariani, associate at European law firm Dentons, said it was unclear why online poker tax rates had been omitted from the draft laws, claiming it could be either a conscious decision or a technical mistake.
“To be honest, it seems that all drafts were prepared in a rush and that they were not thought through.
“If the Ukrainian government had a clear idea about how they are going to regulate the future industry, we would not see such differences as it is obvious that taxes and license fees are interconnected and form the final landscape of the particular gambling market,” Machavariani added.
All four bills will now be reviewed by the country’s parliament, Verkhovna Rada, during the coming weeks, in a process which will see the individual clauses of each bill considered and potentially included within the final regulations. This could potentially see the development of further taxation laws as the market moves closer to launching regulated operations.
During the initial process to approve the main gambling law, a total of 10 separate draft laws were produced, each applying different licence fees, technical standards and regulations towards operators.