A new draft of legislation seeks to impose some tax increases on all gambling products and services offered in Estonia as part of the 2023 gambling policy review of the country’s Government.
The Government of the Baltic country is sticking to its plans to roll out some gambling reforms, so it has tabled an update of its taxation policy that seeks to implement a small but gradual increase for all forms of gambling targeting local residents.
For the time being, Estonia is one of the European countries featuring one of the lowest gambling industry tax rates. Although the Government is set to initiate the aforementioned minor tax increase, market experts believe that the move would still allow the nation’s gambling market to remain attractive, no matter the tightening regulations.
It seems that the new Estonian Government has embraced the ongoing trend of stricter gambling regulations to be unveiled, with increasingly strict measures aimed at ensuring customer protection. As being evident by the newly-proposed Tax Laws Amendment Act, the coalition Government of the country has predominantly rallied behind the cause. The newly-unveiled draft is targeting massive changes to be brought in both the private and corporate sectors, with a special section dedicated to gambling.
Market experts and analysts have described the planned regulatory restrictions and tax increases as the end of the tax heaven Estonian gambling operators have been enjoying so far. If implemented, the proposed measures are likely to cause a temporary downturn but lawmakers do not seem bothered. As proven by examples from other countries across Europe, the gambling sector can flourish even after the implementation of a stricter regulatory policy.
Estonian Lawmakers Envision More Stringent Regulation to Tackle Gambling-Related Harm
The new draft legislation states that gambling companies in Estonia are set to face some tax increases. The 3% increase in lottery services tax is not set to affect private gambling operators because the National Lottery is run as a state-owned monopoly. On the other hand, the measure mostly targets retail gambling operators that promote their services to local users through various marketing initiatives and consumer games.
Reports have shown that the planned betting and online gambling tax increase would make it no longer possible for Estonia to tie with Malta as the lowest-taxed jurisdiction in Europe. The current 5% tax rate on gambling is set to rise to 6% next year, and then gradually increase to 7% in 2026. According to preliminary estimates, the measure would contribute between €8 million and €13 million to the country’s coffers every year.
Still, even after the tax increase, Estonia is expected to remain among the most promising markets, meaning that the local gambling sector should keep its attractiveness to investors.
The massive growth of the local gambling industry has been favored by the low tax rate, experts say. Currently, almost 30 gambling companies are competing over the 1.33-million population of the country, with the increasing competition causing some concerns regarding the rise in gambling-related harm inflicted on Estonians. As mentioned above, that is exactly the reason why the nation has followed the ongoing European trends seeking tighter regulatory rules and regulations, proposing a full ban on gambling advertising.
However, the proposed stricter measures have faced opposition from industry representatives who have called for the Government to adopt a more flexible approach. Gambling industry officials have also highlighted the relationship between sports stakeholders and operators, and urged local lawmakers to agree to further discussions with the sector before making a final decision. The threat of rising societal costs and the consensus between the ruling parties, however, seems to have been enough for the authorities to proceed as planned.
