The eyes of many European markets that are undertaking tax transformations will be fixated on an alternative avenue being explored in Estonia.
Proposals in Estonia will see the staged decrease of the remote gambling tax, as the country has an overall ambition of increasing funding for sports.
Estonia’s remote gambling tax will drop from 6% to 4%, falling by 0.5% per year. During the first reading of the bill, which took place earlier this week, the government assured that all funds will go to ‘culture and sports.
Foreign Minister Margus Tsahkna emphasised that there are provisions in place to ensure the decreases are paused if revenue targets aren’t hit.
The developments and future progression of the Estonian market and its tax intake as a result of the new bill will raise significant interest from other European gambling markets, including the UK.
During a heated exchange between the Betting and Gaming Council (BGC) and the Parliamentary Select Committee earlier this week, following Parliament’s dismissal of any Dutch comparisons, Stephen Hodgson, the BGC’s tax expert, highlighted the steps taken by Estonia.
Hodgson stated: “Estonia’s model demonstrates that alignment of tax, regulation and compliance is more effective than simply hiking the duty.”
There has been domestic criticism of the bill, as Evelyn Liivamägi, Deputy Secretary General of Estonia’s Ministry of Finance, warned that tax revenues “are more likely to decline”.
“To collect as much as currently forecast in the state budget strategy, at least 10 new operators would need to enter the market each year and pay as much tax as the average gambling organiser has been doing so far.”
Not all about Tax reform
As part of the focus of the bill to enable the regulated industry to thrive, it is also intensifying action against the illegal market.
This includes a level up of sanctions for illegal operators and crucially, giving the regulator the ability to block unlicensed domains and freeze operator accounts in a streamlined manner.
Aligning with this is an intensified focus on AML procedures, as the country outlines far clearer requirements when it comes to the KYC process and the steps operators must undertake for player verification.
It underpins the strategy of Estonia to tap into the iGaming industry as a tool to elevate its economy into a place where the regulated iGaming sector can thrive and even rival Malta as a hub for the sector.
