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The proposal for a gambling tax may affect the state and local budgets of Ukraine

State and local budgets in Ukraine may be adversely affected by the proposed flat rate tax on the country's gambling income, a parliamentary commission warned, asking the government to consider subsidies to compensate for the deficit.

High taxes will minimize consumption

Management Committee Ukraine's parliament argued that there is insufficient evidence to justify a reduction in the tax burden for gambling license holders in the country, pointing to the negative social impact of gambling, requires a tax policy that would impose high tariffs to minimize consumption.

The problem stems from the latest gambling tax proposal presented in Ukraine in February, which treats all gambling industries equally with the 10% flat rate gross income, while the initial plan included a tax ranging from 10% to 30%.

In addition to the unification of the tax rate, the new proposal cancels the initial plans to increase license fees, which are to be implemented and effective until the central Ukrainian gambling monitoring system is in place and operational, which would triple revenues before the system launch date.

The proposal also includes a threshold of 8 times annual minimum wage in the country, approx $ 1, 750 with any winnings exceeding this amount subject to the winning tax. take into account the need for operators to make additional contributions to social programs in order to counteract the negative impact of gambling, thereby increasing the cost of their services and reducing the level of gambling even further.

Removing the royalty increase during the transitional period, pending the launch of the central monitoring system, would significantly undercut the funding available for economic, social and cultural cts projects, in addition to the already lower returns from the higher winning threshold, the committee continued, concluding that all this would lead to budget cuts.

Committee members then recalled that under the Penal Code in the country, Art.103 tax breaks that affect local budgets need to be offset by central government subsidies, but the proposal does not contain such provisions.

The commission's analysis concluded with the issue of the deadline for implementing the new tax, as the act was to enter into force on April 1, but this date has already been omitted and requires updating.

The matter is further complicated by the Ukrainian Budget Code, which states that taxes and charges may not be changed during the financial year, setting a deadline for July 15 the year preceding each budget reduction implementations.

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