Ukrainian parliament eyes low GGR tax but hefty licensing fees
Betting tax to be as low as 7.5% of gross gambling revenue and 12.5% for online casino
Licensed gambling operators in Ukraine will be subject to taxation on a gross revenue basis rather than on turnover, EGR understands.
Final tax rates have yet to be confirmed by the country’s parliament, however sources claim the tax rate for sports betting activities will be set at 7.5% of gross gaming revenue (GGR).
Taxation rates for other gambling activities, including online casino, will be set at 12.5% of GGR, while lottery-based gaming will be taxed at 22%.
Ilya Machavariani, associate at European law firm Dentons, warned operators should not be “overhyped” by the low tax rate, due to the presence of the as-yet undetermined annual licence fee.
Under the draft law, annual licence fees will be payable by all operators and will be based on how much operator pays for their licence at an electronic auction to be held next year. All licences will be valid for a five-year period.
Machavariani said: “Using the example of a sports betting firm, the operator will need to pay 7.5% tax rate on GGR, but also at least two or three million Euro annually – if we assume the outcome of the auctions will be x2 or x3 of the starting price of €930,000 for sports betting licences.
“In other words, state fees may still be high and take a sizeable part of operator’s GGR,” Machavariani added.
The draft law providing for the licensing and regulation of online gambling and betting passed the initial review by Ukrainian parliamentary committees last month and provides for the creation of a regulatory entity as early as January 2020.
However, the law itself has been recently reviewed by the Ukrainian council of ministers who have published amendments and passed it back to committee stage for implementation.
EGR understands the council have not called for wide-ranging changes to the law, however they have called for the exclusion of lotteries due to the presence of a state monopoly on the practice.
Further, the council of ministers has said that only Ukrainian based entities should be able to participate in the proposed auctions for lottery licences.
In addition, the council has said that entities holding multiple types of licence, i.e. sports betting, poker and online gambling licences should be subject to stricter compliance requirements.