BUSINESS

Portugal proposes new flat tax of 25% on online gambling revenue

TAGs: portugal

portugal-online-gambling-flat-taxPortugal’s online gambling market appears headed for a seismic shake-up as legislators ponder an end to the punitive tax on sports betting turnover.

Last Saturday, local business news outlet Jornal de Negocios reported that Portugal’s government had drafted a preliminary budget for fiscal 2019 that included sweeping changes to how the country’s online gambling operators will be taxed.

According to the report, the government is proposing a new flat tax of 25% on all online gambling revenue, replacing the 15-30% sliding scale applied to online casino and poker revenue and the 8-16% incremental tax on online sports betting turnover.

The report cautioned that the proposed shift in Special Online Gambling Tax (IEJO) to a 25% flat rate on gross gaming revenue is only a preliminary proposal and the final 2019 budget document is subject to further modifications. However, if the 25% rate goes through, it could provide a sorely needed jumpstart for Portugal’s regulated online gambling market.

The betting turnover tax was widely blamed for the regulated market’s inability to ‘channel’ a sufficient volume of online gambling activity to locally licensed operators. Portugal issued its first online license in May 2016 but to date only seven additional operators have seen the benefits of securing local regulatory approval. The eight operators hold a combined 13 online betting, casino and poker licenses.

Portugal’s online gambling market reported healthy gains in the second quarter of 2018, buoyed by bettors’ interest in the 2018 FIFA World Cup. But of the €37.3m in revenue generated by Portugal’s eight licensed operators, the government’s share came to €16.9m (45%), which, if you can believe it represents a smaller share than the government claimed in earlier quarters.

In January, the Serviço Regulação e Inspeção de Jogos do Turismo de Portugal (SRIJ) regulatory body sought stakeholder input into revising its online licensing regime. The results of this policy review was to have been submitted to the government in May, and it appears that the government may have actually listened to operators’ justifiable complaints. So, just to be on the safe side, be on the lookout for flying pigs.

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