How Much Taxes on Lottery Winnings Are Paid in the CIS
Tax regulations can greatly differ in the countries of the former Soviet Union. This also relates to taxes on lottery winnings. The system seems to be the most loyal in Georgia, and in Ukraine, two types of fees are paid. How does it work?
The Russian authorities thoroughly control the operation of gambling companies and revenues in this field. All lotteries fall into two types, each of which has to pay fixed fees to the state budget.
- Lotteries with an element of risk. This game is similar to games of chance. The main idea is that many people buy lottery tickets and only one or several people get the winnings.
- Promotional lotteries. They are special offers that pursue an advertising goal (for example, a store draws a prize certificate for a certain sum or some valuable product). They are no risks, as the person does not have to buy a ticket.
The type of lottery defines the tax on winnings (personal income tax). For lotteries based on risk, the tax rate is 13%, which is valid for residents of the country, whereas other people have to pay 30%. The winner pays the tax when he or she files the tax declaration.
As for promotional lotteries, winners pay 35% of the winning amount in taxes. This relates only to cases when the winning amount exceeds 4,000 rubles. The lottery organizer makes allocations to the state budget, and the player receives money after the deduction of taxes.
In 2016, a 4% personal income tax on winnings came into effect for permitted gambling activities (lotteries, betting, and casino). Before the adoption of that law, winnings had been exempt from tax in the country. Gambling houses pay money to the state budget on their own.
This year, the 4% tax rate also applies to winnings at online casinos, as they have been legalized in Belarus. Previously, the tax on online winnings was 13%, as they were formally considered as income from foreign sources.
The Republic of Kazakhstan introduced a single tax on winnings for all types of gambling. It is 10% for residents of the country and 20% for the rest of winners. This relates to winnings at casinos, lotteries, drawings, as well as gambling websites. The tax does not apply to the betting activity.
The country has one of the most transparent and clearest tax regulations for winnings at casinos and lotteries. The tax rates differ depending on the facility where the player wins money (or a valuable prize). Winnings that do not exceed 1,000 Georgian lari are exempt from tax.
At land-based and online casinos, as well as betting shops, the tax ranges from 1% to 5% depending on the sum of winnings. As for advertising drawings and valuable prizes in lotteries, the tax is 1% (applies to sums above $400).
The country has a single tax rate for lottery winnings – 18%. Besides, there is a 1.5% compulsory tax to support the army. Overall, 19.5% is deducted from winnings.
Organizers of gambling activities pay money to the state budget on their own and the player gets winnings after deduction of taxes. The exception may be the case when the person wins a valuable prize through a promotional offer (for example, a TV set). The winner has to declare the prize and pay taxes.
Will the taxation rules change in Ukraine after the introduction of the law that legalizes the gambling business? What exactly can entrepreneurs expect? Get to know more at the specialized event UGW 2020.