Portugal’s heavy gambling tax to finally be reviewed by the government as the local regulated market faces channelization issues
The government of Portugal has tasked a working group with analyzing the state of the country’s online gambling industry and assessing whether changes in the way gambling services are taxed should be implemented, local media oulet Infocul reports.
Portugal’s new gambling law took effect in 2015, but it was not before the spring of 2016 that the actual process of reorganizing the local market commenced. The nation’s gambling regulator Serviço de Regulação Inspeção de Jogos (SRIJ) issued a first license to an interested foreign company in May 2016 to mark the start of a new era in the provision of regulated gaming and betting services to Portuguese customers. The regulatory body has issued a total of 16 licenses since then.
The specially assembled work group is composed of six members, including representatives from SRIJ and Portugal’s Ministries of Finance, Economy, Tourism, and Labor. They will have 30 days to review the nation’s current gambling taxation regime and present the government with its findings and proposals for potential changes in how gaming and betting services are taxed.
While the reorganization of Portugal’s market was generally welcomed by EU authorities and industry stakeholders, the country’s taxation regime was heavily criticized and rates were deemed too high to offer viable prospects for the nascent market.
Under Portuguese law, online sports betting services are taxed at between 8% and 16% on turnover, while online casino games and poker licensees pay a 15% to 30% tax on their annual revenues. Licensed operators have complained consistently about the tax rates over the course of the past years, arguing that they were unnecessarily high and that they would impact player channelization in an extremely negative manner.
Is It The Right Time For Review?
Responding to the complaints, the government has said that it would review the newly implemented regulatory framework two years after the first license under the new regime was issued. It has been nearly three years since SRIJ awarded that first license, but it seems that the government might finally be ready to reconsider the current tax rates.
According to a recent report by Eurogroup Consulting, the greater portion of online gambling activity still happens on the black market. The report shows that more than three-thirds of all wagers are placed with unauthorized operators. In other words, the local regulated market has clearly failed to draw players from the unregulated gambling space and channelization is a serious issue in the country.
Proposals for a change in the current taxing regime emerged late last year. Some lawmakers suggested that the current taxation system be replaced by a flat tax rate of 25% on revenue for all forms of online gambling. The Special Online Gambling Tax mulled by Portuguese legislators was supposed to be tacked onto the country’s budget plan for 2019. However, the final version of budget did not include those proposals.
According to analysts, it might not be the right time for a review of the nation’s gambling regulatory framework due to the legislative election this October.
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