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"It is impossible to launch the market without an understandable taxation system", - Alina Plyushch about obstacles in the gambling business


Operators of the gambling market will face double taxation. This is spelled out in the tax code, which is in force now. They were going to change it even before the end of 2020, but no changes were made. The Verkhovna Rada did not have time to put forward the bill 2317d, which regulates inconsistencies in the current tax code. But the licensing conditions have already been accepted, and, according to the regulator, work can also begin. What difficulties gambling operators will face - gamingpost.net learned from Alina Plyushch, a lawyer and member of the advisory and expert council under the Gambling Regulatory Commission.
  • Gambling legalization
  • 2021-01-13 15:37:12
  • 368
"It is impossible to launch the market without an understandable taxation system", - Alina Plyushch about obstacles in the gambling business

Gambling operators can already obtain licenses in Ukraine. But changes to the tax code have not yet been accepted. How will operators be able to work with the current tax rules?

Now the tax code provides for a not entirely logical situation. There is a GGR game tax, which is 10% for slot machines, and 18% for the rest. But what is paid does not reduce the tax. And this is a clear mistake. Now they get double taxation, that is, they pay the game tax, and then pay the income tax again, and the amount of the game tax is not taken into account, does not reduce their taxable income. It certainly doesn't have to be that way. In addition, there is still the problem that bookmakers, slot machines and online casinos have to pay triple royalties before the online monitoring system starts. And not only triple royalties, but also GGR and corporate tax. Therefore, bill 2713d provides that there will be no GGR until the online monitoring system is launched. Either until January 1, 2024, or until the system starts up, if it will be later. Then they will pay only this triple size and there will be no GGR, only income tax. Which is also logical, this is intended to somehow compensate for the threefold size of licenses.

Is it possible to assume that until the amendments to the tax code are accepted, operators will not want to enter the market?

I think yes. Nobody has been licensed yet. Foreign operators, even if they apply for a license, until the taxation issue is resolved, they will definitely not actively invest in here.

How long can this wait be?

It is planned that the bill will be accepted in the near future. It was expected to be so before the new year. Unfortunately, we did not have time. Therefore, as soon as the Verkhovna Rada begins to work, I think that it will be considered in the near future and, most likely, will be accepted. Because everyone understands that it is necessary to launch the market, and without an understandable taxation system, this is impossible. We discussed this at a meeting of the expert council, everyone in the commission understands perfectly well that without bill 2713d the market will not be able to launch. But we have an expectation, we are optimistic about what will be accepted in the near future. The bill has been more or less agreed upon, the amendments of many deputies have already been taken into account. Therefore, we still hope that it will be accepted in January.

The commission says that about twenty operators have already applied for licenses. Were they afraid of the tax situation?

Why were the operators in a hurry to submit documents? Because they wanted to get licenses last year, to save on licensing fees. Because it is tied to minimum wages. And the minimum wage was lower last year. The payment is fixed immediately after the decision to issue is made. Even if the minimum wage rises, the royalty fee is fixed. Since we did not have time that year, now this month is not important for operators. It is clear that they are now submitting documents, the commission will consider them. But it is expected that this month, while the commission is considering the documents, the law will be accepted.

The bill 2713d provides for different tax rates for different types of gambling. Bookmakers, for example, will pay the least. Do you think it is necessary to equalize tax rates?

Honestly, I don't even know why bookmakers have 5%, while the rest have 10% and 12.5%. It is clear that this law must be accepted. But regarding the rates, I did not calculate, did not do an economic analysis, why these rates differ. I have not come across any justification why for someone 5%, for someone 10%, and for someone 12.5%. In any case, this law is needed. The market will not start without it. Then, over time, if it becomes clear that this is unfair, that for some preferences in relation to others, the rates can be changed. In any case, this tax will not be paid until 2024. Therefore, I think that before the 2024, you can still change this rate 10 times.

In addition to taxation, there is also a question with certification. According to the law, all equipment must be certified, but it is still impossible to obtain it. Can operators get started in such a case?

Equipment and certification is a big issue that we are constantly discussing. Unfortunately, this issue has not been resolved yet. Because the issue of equipment certification must be resolved in the technical regulation, but there is no technical regulation yet. And, unfortunately, now in Ukraine there is no technical ability to issue certificates, which would confirm that the equipment is properly certified. And everyone understands this. But I would like to launch the market now, but there will be no certification, objectively it will not be in the next six months for sure. Therefore, the idea is being discussed to give, perhaps, some kind of transitional period for operators, so that they can still work on the equipment without confirming. Until the certification system is launched. This, unfortunately, is a delay, which was not seen in due time. The adoption of the law was very delayed, they did not pay attention to the fact that in the transitional provisions the deadline for launching the certification system is provided until January 1, 2021.

Will the new transitional period need to be submitted as an amendment to the law? After all, from experience we see that edits can be considered for a very long time.

Yes, it will be necessary to amend the law, because the current law gave a deadline, but it was before January 1, 2021. When the draft law was being prepared, it was assumed that it would be accepted earlier. And already January 1, 2021 has already arrived, therefore, accordingly, it is necessary to make an amendment and this period should be made longer, at least until January 1, 2022. If this is not done, what to do with certification is generally not clear - after all, there are no technical regulations at the moment. Most likely, foreign operators will wait for the issue with the technical regulations to be resolved somehow. Or they are given some kind of transition period until the adoption of technical regulations, explaining that they can work without confirmation of certification. Either this technical regulation will be accepted, and this system will somehow be launched, it will be indicated who will issue such confirmations. I think everyone understands that this is a technical violation. Everyone understands that this is technically impossible, no one can fulfill the certification requirements, because there are none.

But what about the implementation of the law? After all, none of the operators wants to be fined, even realizing that it is technically impossible to comply with the law in this case.

This is also difficult ... There are two types of licenses. For example, we take licenses for slot machines. There is a license to operate and a license for each slot machine. In order to obtain a license for each specific slot machine, according to the law, you need to submit the certificate of conformity. The form of this certificate does not exist today, there is no technical regulation. Therefore, today the commission can only give a license for activities, but not for devices. Until this is resolved, I do not think that the commission will take responsibility for issuing a license for the slot machine if it is a violation of the law.

What needs to be done in the near future for the market to start working this year?

I see that in order for the market to start, it is necessary to accept Law No.2713d and make changes to the fact that a year is given to resolve the issue of certification. Then the market can start working already. Because if this is not done, then it is not clear how the market will work, how to deal with taxes. Maybe someone will take a risk and buy a license with the hope that later they will change and there will be a clear taxation system. But with certification - it is not clear. It turns out that everyone will work without certified equipment. It's a little easier for online. And for slot machines - I don't understand at all if there is a direct rule of law that a certificate must be submitted for a license.

Interview exclusively for gamingpost.net

The gambling portal gamingpost.net monitors the process of legalization of gambling in Ukraine. Read the latest news: Illegal gambling advertising: where did it come from and is it possible to get rid of it?

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