The Latvian Saeima, known to be the Baltic nation’s parliament, today approved a set of amendments to the Law on Lotteries and Gambling Fee and Tax that provide for significant changes in the way gambling tax money is split.
Under the newly adopted provisions, the state budget will receive larger contributions from the nation’s gambling industry. However, municipalities that host gambling establishments will have the tax revenue they receive from said venues substantially reduced.
The Latvian Finance Ministry has previously said of the amendments that their ultimate purpose would be to shift the tax burden from labor to consumption and capital, balance out tax rate with gambling companies’ growing turnover, and increase state budget revenue.
Currently, 75% of the tax revenue contributed by locally licensed gambling operators goes to the state budget, while the remaining 25% is distributed to municipalities that host gambling venues.
Lawmakers proposed changes in the current proportions in a bid to secure more funds for healthcare. The newly enforced measures would increase the state budget’s take to 95% of all tax revenue contributed by gambling operations, while reducing host municipalities’ share to 5%.
Increased Taxes on Slot Machines and Table Games
Under the approved amendments, operators of gambling establishments will have to pay higher taxes on their offering starting next year. At present, Latvian gambling license holders pay annually €23,400 per each roulette, card game, and dice game table they operate and €4,164 per gaming machine.
The annual fees are set to increase to €28,080 for gaming tables and €5,172 for gaming machines.
The recently approved tax amendments were the latest of a series of changes implemented to Latvia’s gambling law this year. In April, the Saeima passed a number of measures that aimed to crack down on the provision of unauthorized online gambling services on the territory of the country.
Under those new rules, local financial institutions and local Internet service providers can be ordered to disclose the identities of nationals who gamble on unregulated websites. Any gambler caught to be breaching the regulatory regime faces fines of up to €350 per incident. Penalties are also imposed on those who attempt to avoid paying taxes on winnings. Such incidents are subject to fines of 23% on winnings of more than €3,000.
The online gambling rules required financial institutions to block transactions to and from unlicensed gambling operations and Internet service providers to block access to unregulated websites that provide betting and gaming products.
News about the pending gambling tax allocation changes emerge as the Latvian capital, Riga, is looking to shutter gambling halls located on the territory of the city. The Riga City Council supported earlier this year a measure that aimed to revoke the licenses of around 200 gambling halls.
The city’s crackdown on gambling establishments originally kicked off in 2011 when the City Council stopped issuing new gambling hall licenses. In 2017, Riga officials ordered the closure of 42 gambling halls in the historical center of the Latvian capital.
Source: Municipalities to receive just 5% of revenue from gambling tax, LETA
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