RGA renews calls for Portuguese gambling rethink

Portugal’s government has seemingly withdrawn plans to introduce a flat 25% tax rate on all types of online gaming revenue after omitting the proposal from its 2019 Budget draft.

Last week, reports in the Portuguese media suggested that the government was keen to replace the sliding scale system that is currently in place in the country and charges some of the highest rates in Europe.

Licensed companies pay tax at various rates depending on how much revenue they generate and the type of services they offer. Rates are set at between 15% and 30% for online poker and casino games, while sports betting has an incremental tax of between 8% and 16% on turnover.

The government had been looking at including the Special Online Gambling Tax (IEJO) as part of its Budget for fiscal 2019, but this did not appear in the official document presented late last week.

Portuguese lawmakers are set to meet next week to discuss this Budget, with a vote scheduled for November 30. It is unclear whether the proposed IEJO could be added to the Budget prior to its finalisation.

Speaking to iGamingBusiness.com, Pierre Tournier, director of government relations at the Remote Gambling Association (RGA), said the organisation is keen for such a change to take place, but it is unlikely the matter will return to the agenda before the end of the year.

Tournier said: “We understand the government has been envisaging a broader reform of online gambling regulations and the Budget Bill might quite simply not provide the best legislative vehicle to debate some of the proposed amendments, in particular those that are not tax-related.

“We are hoping that the proposal will come back on the government’s agenda once the Budget is passed but that is unlikely to happen before the end of the year.”

Tournier also outlined the RGA’s hopes for the future of the Portugal gambling market, outlining two major problems the government should seek to solve.

He said: “The government is unable to reduce dramatically the size of the unregulated market and our EU state-aid claims remain unanswered.

“We are of the view that the best way to resolve these is to apply the same taxation to all the online gambling products based on gross gaming revenue with a rate similar to what applies in other jurisdictions such as Spain where the industry is regulated efficiently.”

Portugal’s present tax rates are incredibly high even compared to other jurisdictions that are turnover based. Ireland’s betting sector is currently attempting to reverse a lift in turnover tax from 1% to 2% – a fraction of Portugal’s rate.

The UK is also reportedly set to introduce imminent changes to its gambling tax rates. UK Chancellor Philip Hammond has been tipped to increase the current 15% rate on gross gaming yield to between 20-25% as part of his Budget plans due next week. This rise would come despite firms also facing new regulations and restrictions on FOBTs.

Image: Santeri Viinamäki