Ukraine Reduces Tax Rates for Online Betting Companies
The Ukrainian Government has decided to reduce tax barriers for all online and land-based casinos to help them recover from the COVID economic downturn. Ukraine’s parliament came to a significant decision in last week’s meeting of all their MP’s. Together with the Ukrainian gambling authority, reduced taxation was a viable strategy to help reduce the economic deficit caused by COVID-19. Support for the bill was unanimous, and an overwhelming majority helped pass through the new tax brackets for all Ukrainian casinos and online betting firms.
Gambling companies in Ukraine will pay reduced tax over the next 4-5 years. The Government wants to reduce financial pressure and enable firms to revitalize their operations after a difficult economic year caused by the pandemic ©Pavlofox/Pixabay
Ukraine has one of the highest tax rates in Europe, the new bill will only level the playing field with the rest of the continent, but it undeniably benefits all betting firms who’ve struggled over the last year and a half. Prior to the new legislation, the agreed fee was in excess of $200,000. A %20 reduction will help to reduce the pressure on betting companies.
As well as the reduced overall fee, the taxation will be based on income and revenue figures rather than a fixed figure. This could work out to be more expensive for platforms with increased yearly revenue. However, in the current circumstances, this is unlikely to occur due to reopening procedures only just starting. Organizers of special covid friendly events will also receive additional backing through government grants, enabling them to optimize their operation successfully.
A policy review will occur every three months; the gambling authority has frameworks in place that enable them to analyze industry data and market trends. From this information, they can deduce the overall success of the new bill every quarter. Tax rates have been a long-standing issue for Ukrainian bookmakers as they believe they were unfairly treated during the European recession of the late 2000s. Several international companies such as Vbet have acquired licenses for Ukrainian operations, which will help to bring more revenue to the struggling sector.
The Russian Government adopted a similar strategy at the beginning of the pandemic, reducing tax rates for all leisure-based industries, including casinos, cinemas, venues, and gyms. Despite their foreign policy disagreements, Ukraine received inspiration from Russia and will now do their best to assist their industries with recovery after an extremely turbulent two years.
Ukraine Battens Down the Hatches
It’s no secret that up until 2019, everything but casino gambling was completely illegal in Ukraine. Since the gambling pill passed in early 2020, the Government has grown reliant on the betting industry as a large tax source, especially in the last year as leaders struggled to finance their population while lockdown took place. Volodymyr Zelensky heaped praise on the sector for its resilience and compliance with legal measures over the past two years.
In 2020, the government made over $150 million in tax revenue from the gambling industry. Considering the reduction in consumer spending, this is a huge figure that is expected to rise over the coming years. At one point, parliament reconsidered amending the gambling bill to prevent international firms from entering their country; however, the monetary rewards warranted sufficient evidence to prevent them from doing so.
Ukraine is now one of Europe’s most exciting investment opportunities, an emerging market due to recently passing the bill legalizing online gambling. International ventures are descending like vultures trying to establish themselves before the market becomes oversaturated. Tax rates will not be reduced for international firms situated outside Ukraine as they do not come under their full jurisdiction. The gambling authority has granted a record number of licenses to smaller firms in an effort to promote local businesses
Illegal Operations Shut Down by Police
The Police act as a key asset to the Ukrainian Gambling Authority; they’ve had close links for years and often work together on operations involving illegal gambling setups. Over 30 separate operations were shut down in the space of a month, including 12 online server hosts and two casinos suspected of tax evasion and other fraudulent activities.
Suspected terrorist organizations have been closely linked to many of the illegal gambling setups in Ukraine as a way to launder money to and from other countries. Kyiv has the highest concentration of illicit activity, and police presence has increased in an attempt to counter it. From one warehouse in the capital, they seized over twenty roulette tables, several slot machines and a huge cache of firearms leading to the arrest of multiple men supposedly connected with the operation.
