Impact Of Gambling Tax Proposal On Ukraine State And Local Budget

The Expert and Scientific members of the Management Committee of the Parliament have disagreed on the latest tax proposal on gambling activities because the proposal might impact the budget.

The latest tax proposal sets an even 10% tax on all the gambling verticals and rejects all the plans to increase the fees for the license. The management committee pointed out many factors that will influence the gambling tax rate policy and no justification on the amount of burden upheld on operators.

The new proposal for the flat tax on gambling revenue in the country adversely affects the state and local budget of Ukraine. A parliamentary committee has already warned about this issue and urges the government to consider the support and acknowledge the situation.

Fear of minimizing the rate of consumption

The Scientific and Expert Magazine Committee of the Parliament in Ukraine has argued that there is limited evidence to justify the decrease in the tax pressure on casino operators in Ukraine. The committee outlines the negative aspects of gambling tax policy that would implement higher duties to minimize consumption.

The latest gambling tax plan was proposed in February, which reviews all the gambling verticals with a flat 10% tax rate on the gross gaming revenue. The latest proposal was in contradiction with the initial plans of tax rates ranging from 10% to 30% on the gross revenue.

Apart from standardizing the tax rate, the proposal also cancels initial plans of increase in the license fees to be effective until Ukraine’s central monitoring systems come into action, which would have resulted in tripling the revenue before the launch date of the system.

The new tax rate proposal needs attention

The Scientific and Expert Management Committee also pointed out that the tax policies should also consider the need of operators to make an additional donation to the social programs to recognize the harmful influence of gambling and hence, raise the cost of services and further lessen gambling levels.

The removal of the hike in the gambling tax rate will eventually undercut the finance available for economic, social, and cultural plans. Topping that, a fixed tax rate means lower returns even on the high gross gaming revenue on the casino operators. The committee continues reflecting that all these negative pinpoint will reflect on the budget cuts.

The committee members then pointed out that under the Criminal Code, Article 102, tax goods that might affect the local budget needs consideration from the government subsidies, but the current proposal does not have any such outline in place.

The issue pointed by the committee is further entangled by Ukraine’s Budget Code which states that the taxes and fees cannot be amended during the year of the budget announcement.

The committee addresses the implementation date of the new tax policy, as the legislation was to put into force from April 1st, but they have already passed the date and are required to provide an update.