Legal grounds for state regulation of economic activity in the organization and conduction of gambling in Ukraine is defined by the Law of Ukraine No. 768-IX as of 14.07.2020 "On state regulation of activities regarding the organization and conduction of gambling" (hereinafter – Law No. 768).
Article 1 of the Law No. 768 stipulates that winning (prize) is funds, property, property rights that are subject to payment (issuance) to a player in case of winning a gambling game according to the published rules for conducting such gambling game.
Bet is monetary funds or a game substitute of UAH, which is transferred by a player to the organizer of a gambling game, is a condition for participation in a gambling game and, basing on its size according to the rules of such gambling game, the size of winning (prize) is determined.
Relations arising in the tax and levy administration are regulated by the Tax Code of Ukraine (hereinafter –Code) (Paragraph 1.1 Article 1 of the Code).
Income with its source of origin from Ukraine is any income received by residents or non-residents, including from any types of their activities on the territory of Ukraine, its continental shelf, in the exclusive (maritime) economic zone, including in the form of winnings, prizes (Sub-paragraph “g” of Sub-paragraph 14.1.54 Paragraph 14.1 Article 14 of the Code).
Personal income taxation is regulated by Section IV of the Code, according to Sub-paragraph 162.1.1 Paragraph 162.1 Article 162, of which tax payers are individuals-residents.
Sub-paragraph 163.1.1 Paragraph 163.1 Article 163 of the Code stipulates that taxation object of a resident is the total monthly (annual) taxable income, which includes income in the form of winnings, prizes (Sub-paragraph 164.2.8 Paragraph 164.2 Article 164 of the Code).
Procedure for taxation of winnings and prizes is determined by Paragraph 170.6 Article 170 of the Code, according to Sub-paragraph 170.6.1 by which the taxpayer’s tax agent during accrual (payment, provision) in his/her favor of income in the form of winnings (prizes) in lottery or in other draws, in a bookmaker pair, in a totalizer pair, prizes and winnings in the monetary form, received for victory and/or participation in amateur sports competitions, including billiards, is a person who carries out such accrual (payment).
Sub-paragraph 170.6.2 Paragraph 170.6 Article 170 of the Code stipulates that tax agent – lottery operator, within terms specified by the Code for monthly tax period, has to pay (recalculate) the total amount of tax calculated at the 18% rate, determined by Paragraph 167.1 Article 167 of the Code, from the total amount of winnings (prizes) paid for the tax (reporting) month to lottery players.
Tax agents – lottery operators in tax calculation, submission of which is provided for by Sub-paragraph "b" of Paragraph 176.2 Article 176 of the Code, reflect the total amount of accrued (paid) income in the reporting tax period in the form of winnings (prizes) and the total amount of tax withheld from them. At the same time, tax calculation does not include information about amount of a separate winning, amount of tax charged on it, as well as information about the individual tax payer who received income in the form of a winning (prize).
In addition, income taxation in the form of winnings and prizes other than lottery winnings (prizes) is carried out according to the general procedure established by this Code for incomes that are finally taxed at the time of their accrual, at rate specified in Clause 1 of Paragraph 167.1 Article 167 of the Code (Sub-paragraph 170.6.3 Paragraph 170.6 Article 170 of the Code).
During the accrual (payment) of income in the form of winnings in lottery or in other raffles, which involve prior acquisition by the taxpayer of a right to participate in such lotteries or raffles, the taxpayer's expenses in connection with receiving such income are not taken into account (Sub-paragraph 170.6.4 Paragraph 170.6 Article 170 of the Code).
Income, specified in Paragraph 170.6 Article 170 of the Code, is finally taxed at the time of their payment at their expense (Sub-paragraph 170.6.5 Paragraph 170.6 Article 170 of the Code).
In addition, the specified income is subject to the military levy’s taxation (Sub-paragraph 1.2 Paragraph 161 Sub-section 10 Section XX "Transitional provisions" of the Code).
Military levy rate is 1.5 percent of the taxation object, defined in Sub-paragraph 1.2 Paragraph 161 Sub-section 10 Section "Transitional provisions" of the Code (Sub-paragraph 1.3 Paragraph 161 Sub-section 10 Section XX "Transitional provisions" of the Code).
Accrual, withholding and payment (transfer) of the personal income tax and military levy to the budget is carried out according to procedure established by Article 168 of the Code.
Taking into account above specified, income in the form of winnings (prize) of a player in the online casino gambling is subject to the personal income tax and military levy on a general basis, i.e. taxation object with the personal income tax and military levy is the same for each of the payments.
